If you’re an investor who’s active in the cannabis sector, it’s been a big summer. Canada, of course, just became the second country in the world with a federal legal cannabis program. And that opens up significant investment opportunities, especially considering Canada is one of the largest exporters of legal cannabis on the plant.
Furthermore, now that marijuana is legal in Canada, cannabis companies can trade on stock exchanges not just in Canada, but in the United States as well. It’s an opportunity even state-legal cannabis companies in the U.S. can’t take advantage of since they’re in violation of federal law. So naturally, Canadian investors are dumping serious amounts of cash in the booming industry.
But now, investors are finding that their legal investments are barring them from entering the United States from Canada. The reason? The U.S. doesn’t admit anyone into the country who’s involved in trafficking illegal drugs. And according to U.S. law, that includes people who legally invest in weed.
Invest in Legal Cannabis and You Could Be Denied Entry to the United States
Sam Znaimer is a Canadian venture capitalist with three decades’ experience investing in tech, telecommunications and other industries. Recently, Znaimer put some cash down on some U.S. cannabis companies operating legally, at least as far as their states are concerned.
In May, Znaimer did something he’d done countless times over the years. Attempt to cross the border from Vancouver, Canada into the United States. But this time, border agents flagged Znaimer for inspection and ended up interrogating him for several hours.
The questions weren’t about whether Znaimer was a cannabis consumer or had in the past. Although those same questions have been used to block some too-honest Canadian tourists from entering the United States—some for the rest of their lives.
Instead, Znaimer had to answer for something else: his recent $100,000 investment in the U.S. cannabis industry. He confirmed that he had in fact made investments in legal weed in the U.S. And that’s when border agents decided to deny Znaimer entry.
In short, from the perspective of U.S. law, Znaimer was making money off drugs. And even though that drug is state-legal marijuana, as far as the federal government is concerned, it might as well be cocaine or heroin.
How Banning Canadian Investors Hurts U.S. Cannabis Companies
In 15 years of practicing law, American immigration attorney Len Saunders had never seen a Canadian investor denied entry for their involvement in the U.S. cannabis industry.
Over the past few months, however, Saunders has seen a dozen cases like Znaimer’s. The U.S. Department of Customs and Border Protection hasn’t made any official announcements about a new border policy. But agents on the ground definitely seem to be taking a different approach toward enforcement.
And that’s a problem for state-legal cannabis companies in the U.S. If border agents continue to deny entry to Canadian investors, that’s a fairly large incentive to ignore the U.S. market entirely. And that could be seriously damaging to the legal cannabis industry in the U.S. Business trips to the United States from Canada are already on the decline.