CanadaB次元官网网址檚 cannabis industry, banking on the chance to expand into the United States, is nervously eyeing the American political calendar and the Biden administrationB次元官网网址檚 narrow legislative window to ease federal prohibitions on recreational marijuana.

The White House has said President Joe Biden supports decriminalizing cannabis, legalizing pot for medicinal purposes and changing how marijuana is classified by the Department of Justice to allow for further study of its potential positive and negative effects.

But while Democrats currently hold all the political cards on Capitol Hill, their control of Congress remains precarious, and progressives fear the Republicans are likely to take over the House of Representatives following the 2022 midterms.

That means if change is going to happen in the United States, it needs to happen soon, said David Culver, vice-president of global government relations for Canopy Growth Corp., one of the largest players in CanadaB次元官网网址檚 legal cannabis market.

B次元官网网址淲e were literally dealt, in my opinion, the perfect political hand for cannabis reform to occur during this Congress,B次元官网网址� Culver said in an interview.

B次元官网网址淭he White House made it very clear when they took office, at least to our industry, that they needed to get this pandemic under control. WeB次元官网网址檝e been sitting with this perfect political hand for almost six months now B次元官网网址� and weB次元官网网址檙e still waiting patiently as it relates to the administration.B次元官网网址�

The cannabis landscape in the U.S. is an ever-changing patchwork; the drug is or will be allowed for medical use in 36 states and for recreational use in 13, as well as the District of Columbia. But federal law still considers it a Schedule I controlled substance with high risk of abuse and no accepted medical use, alongside drugs like heroin, LSD and peyote.

As a result, itB次元官网网址檚 impossible for companies operating in a legal state landscape like California or Colorado to make use of institutional banking or financing services, access capital markets or do business outside their respective state lines. Nor can they take advantage of tax writeoffs for routine business expenses, capital equipment like computers or payroll costs.

Still, there is rampant enthusiasm among Canadian players looking for opportunities to expand into the U.S., where the prospect of a legal market that could soon top US$40 billion annually offers a salve for what have been largely disappointing results at home.

That doesnB次元官网网址檛 mean it hasnB次元官网网址檛 been complicated: in 2019, Canopy entered into an elaborate acquisition deal with New YorkB次元官网网址檚 Acreage Holdings, amended last year, thatB次元官网网址檚 contingent on an important B次元官网网址渢riggering eventB次元官网网址�: changes to U.S. federal law.

B次元官网网址淭he United States is going to be a core market for Canopy Growth,B次元官网网址� CEO David Klein said in a statement announcing the amended deal.

Aphria Inc. CEO Irwin Simon said much the same in April of his Ontario companyB次元官网网址檚 acquisition of SweetWater Brewing Co., an Atlanta craft beer purveyor that aligns its brands with a B次元官网网址渃annabis lifestyle.B次元官网网址� Aphria merged last month with B.C. giant Tilray, which now controls more than 17 per cent of CanadaB次元官网网址檚 retail cannabis market.

Kelowna, B.C.B次元官网网址檚 Valens Co. agreed in April to spend US$40 million to buy out Green Roads, a Florida-based producer of oils, topical ointments, edibles and supplements infused with cannabidiol, or CBD, a non-intoxicating component of the marijuana plant.

As long as the COVID-19 pandemic continues to wane in the U.S., Culver said expects the Biden administration and Congress to get serious about cannabis reform at some point in the fall.

That could happen in a number of ways: Senate Majority Leader Chuck Schumer is planning a comprehensive legislative effort to remove cannabis entirely from the federal schedule of controlled substances. Failing that, the SAFE Banking Act B次元官网网址� a bill that aims to make financing more accessible B次元官网网址� has already passed the House of Representatives and is currently before a Senate committee.

In February, Schumer and Democratic allies Sen. Cory Booker of New Jersey and Sen. Ron Wyden of Oregon vowed to begin drafting their legislation B次元官网网址渋n the early part of this yearB次元官网网址� and that it would be a top priority for the Senate.

The politics, however, are complicated. Schumer has said he fears U.S. lawmakers on the fence about full-blown legalization would see the SAFE Banking Act as a more reasonable compromise should it come up for a vote in the Senate first.

B次元官网网址淭here is a huge political challenge in getting all the reform advocates to agree on the right model,B次元官网网址� said Douglas Berman, an Ohio State University law professor and expert on marijuana policy.

B次元官网网址淚t becomes dangerously easy for the status quo of no reform to persist, even if thereB次元官网网址檚 widespread affinity for reform in general.B次元官网网址�

Not everyone in the sector in the U.S. is keen to see the federal laws change.

Living inside a walled garden has its advantages, said Frank Knuettel, the chief executive of Terra Tech Corp., a high-tech grower and dispensary operator with facilities in California and Nevada.

B次元官网网址淚 actually like the fact that itB次元官网网址檚 federally illegal right now, because we have a competitive moat around the business,B次元官网网址� said Knuettel.

B次元官网网址淲e have an opportunity to build our company and our industry without the outside competition from really large consumer packaged goods companies or beverage or tobacco companies.B次元官网网址�

Knuettel said heB次元官网网址檚 more worried about those heavy hitters B次元官网网址� Big Tobacco in particular B次元官网网址� than he is about the prospect of a Canadian invasion of the U.S. cannabis sector.

B次元官网网址淭obacco consumptionB次元官网网址檚 declining, and while itB次元官网网址檚 still a really good cash cow, theyB次元官网网址檝e got to be looking down the road and wondering how long that cash cowB次元官网网址檚 going to last,B次元官网网址� he said.

B次元官网网址淚 think the threat from Big Tobacco is potentially the largest threat that our industry and any company in it would see.B次元官网网址�

ThereB次元官网网址檚 another firewall, said Knuettel. Canadian operations that work directly with cannabis B次元官网网址� so-called B次元官网网址減lant-touchingB次元官网网址� companies B次元官网网址� are allowed to list their stocks on U.S. exchanges because they do business in a foreign jurisdiction where their product is legal.

That listing ability goes away as soon as they buy a plant-touching company in the U.S. B次元官网网址� a wrinkle that Knuettel said has kept some would-be Canadian suitors at bay while American companies have been able to take advantage of recovering capital markets and a widening legal landscape.

B次元官网网址淎s a result, the large U.S. suppliers and companies are now on a much more equal footing than the large Canadian counterparts,B次元官网网址� which have been struggling domestically, he said.

Eventually, those would-be Canadian suitors could find themselves becoming the hunted instead of the hunter.

B次元官网网址淎t some point, the script is going to flip,B次元官网网址� Knuettel said.

B次元官网网址淐anada represents one of the largest non-U.S. markets, and I could envision a scenario where some of the largest players pick up on the large Canadian players at some point in the future, if the current dynamic continues.B次元官网网址�

B次元官网网址擩ames McCarten, The Canadian Press