U.S. pot firms urge Trump to dominate North American marijuana industry

Cannabis producers claim the U.S. is “rapidly losing” its competitive advantage to Canada

An American cannabis producer is warning President Donald Trump that Canada is poised to dominate the North American marijuana industry unless the United States takes steps to eliminate barriers to financing and market capital south of the border.

A full-page ad in Tuesday’s Wall Street Journal, framed as a plea to the White House and its most prominent occupant, warns the U.S. is “rapidly losing” its competitive advantage to Canada, where recreational pot becomes legal at midnight.

“The cannabis industry is legal in 31 states, yet most domestic companies do not have access to traditional banking or institutional financing,” reads the ad, signed by Derek Peterson, the chairman and CEO of California-based Terra Tech Corp.

“As a result, many U.S. companies are being forced to move to the Canadian public markets to access capital and build their businesses.”

RELATED: Postal services ready for looming wave of legal cannabis deliveries

The ad also warns that Canadian firms have tapped into U.S. investor interest in order to raise and spend money in order to acquire American cannabis assets.

“Regrettably, this will put what should be one of our homeland’s greatest economic drivers in foreign control.”

In an interview, Peterson admitted to having mixed feelings about the momentous paradigm shift that’s scheduled to begin north of the border when the Trudeau government’s promise to legalize recreational pot finally becomes a reality.

“It’s a double-edged sword,” he said. “I’m afraid of the economic impacts right now if we don’t do anything, but at the same time, (Canada) really triggered and ignited the national discussion.

“I literally would categorize that as the single most pivotal point in our own path towards legalization, that they took the initiative to do it.”

The challenge for U.S. firms lies in the fact that while recreational cannabis is legal in nine states and medicinal pot in 22 others, it remains illegal under federal law. Sending product across state lines is impossible, as is the ability for companies to obtain financing from major banks.

Federal statutes aimed at curtailing the cocaine trade in the 1980s remain on the books, making it impossible for companies like Terra Tech to deduct routine business expenses and capital equipment like computers and payroll costs against their taxes, Peterson said.

RELATED: NHL players say Canada’s legalization of marijuana won’t impact them

Producers have to rely on smaller financial institutions like credit unions for financing, while the major players in the world of institutional capital have been flocking to back Canadian rivals, he added.

The result is what Peterson called a “federal illegality tax” that extends across the spectrum of a U.S. producer’s operations and swallows profit margins whole.

“The reality is, like it or hate it, you guys are getting a first-mover advantage,” he said of the Canadian industry.

“We’re sitting here with no access to banking, getting our credit cards shut off, having all these crazy headwinds due to the dichotomy between state and federal law, and you guys took the first-mover advantage from the federal perspective and you’re reaping the rewards of it.”

The solution, Peterson writes, is for the U.S. government to allow states to enact their own cannabis regulations “so that we can fairly compete and protect our domestic industry before it’s too late.”

The federal philosophy on recreational pot in the U.S. has been fraught with confusion since Trump was elected in 2016.

Despite campaigning on a promise to leave the issue up to individual states, the White House appeared to reverse course earlier this year by rescinding the so-called Cole memorandum, an Obama-era edict that prevented federal interference with those states where recreational cannabis is legal. Trump has since insisted, however, that the federal law would not be enforced in those jurisdictions.

Rep. Dana Rohrabacher, a Republican congressman from California, has since said he has been assured that Trump plans to proceed with reforming federal marijuana laws as they pertain to medicinal pot once next month’s midterm elections are over.

As of Wednesday, Canada will be the first G7 member to greenlight legal recreational pot — a move Prime Minister Justin Trudeau has justified as an effort to better protect young people from the drug’s effects and eliminate the influence of organized crime.

U.S. Customs and Border Patrol officials were set to hold a briefing later Tuesday on how they plan to enforce federal pot laws at Canada-U.S. border crossings.

James McCarten, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Comox Valley Monarch Lions help ‘SPOT’ possible student vision problems

When Helen Keller challenged Lions Clubs International in 1925 to become “Knights… Continue reading

Vancouver Island brewery re-brands again after cryptic new logo failed

Victoria-based brewers said goodbye to confusing hexagon logo

North Island College Foundation helps more students than ever in the Comox Valley

More than 170 North Island College students in the Comox Valley received… Continue reading

Courtenay mom warns of candy-luring incident near Willemar Road

A Courtenay mother is speaking out after a man was reported to… Continue reading

VIDEO: Marvel Comics’ Stan Lee dies

Marvel co-creator was well-known for making cameo appearances in superhero movies

Vancouver Island remembers

Important stories shared as Islanders salute those who made the greatest sacrifice

VIDEO: Newcomer kids see first Canadian snowfall

Children arrived in Canada with their mother and two siblings last week from Eritrea

Feds dropped ball with WWI anniversary tributes: historians

Wrote one historian: ‘Other than the Vimy Ridge celebration … I think they have done a very bad job’

Sides ‘far apart’ in Canada Post talks despite mediation, says union

The lack of a breakthrough means rotating strikes will resume Tuesday

Feds’ appeal of solitary confinement decision in B.C. to be heard

Judge ruled in January that indefinite such confinement is unconstitutional, causes permanent harm

B.C. health care payroll tax approved, takes effect Jan. 1

Employers calculating cost, including property taxes increases

Nunavut urges new plan to deal with too many polar bears

Territory recommends a proposal that contradicts much of conventional scientific thinking

Shelter struggles: Landlord takes over rental unit whenever visiting B.C. town

Renter’s story highlights how hard it is to find accommodation in Revelstoke

Most Read