More than three years after legal cannabis arrived in North America on a national scale, Congress is taking another stab at following Canada鈥檚 lead by ending long-standing federal prohibitions on marijuana in the United States.
A meeting Wednesday of the House of Representatives rules committee set the stage for debate Thursday and a vote as early as Friday on New York Rep. Jerry Nadler鈥檚 Marijuana Opportunity Reinvestment and Expungement Act.
If passed by both the House and the Senate and signed by President Joe Biden, the bill 鈥� known as the MORE Act 鈥� would help clear the way for the industry鈥檚 expansion by declassifying marijuana as a controlled substance.
But unlike in Canada, the centrepiece of the effort is criminal justice reform: in addition to imposing taxes on sales and allowing access to financial services, the bill would eliminate criminal penalties and establish a system to expunge cannabis convictions.
鈥淭oday in America, you are over three times more likely to be arrested for cannabis if you鈥檙e Black,鈥� committee chairman Rep. Jim McGovern said as Wednesday鈥檚 hearing got underway.
鈥淏lack and brown Americans use cannabis at roughly the same rate as everyone else, but if you look like me, you鈥檙e far less likely to face the same penalties. None of us should be OK with a system that treats people differently based on the colour of their skin.鈥�
The bill has a long way to go, particularly in the Senate, where Majority Leader Chuck Schumer, another New York Democrat, is likely to prioritize his own bill: the Cannabis Administration and Opportunity Act, expected in the upper chamber next month.
Industry observers in both the U.S. and Canada, however, have seen this movie before.
鈥淚 am skeptical as to whether the Senate is actually going to get on board with that particular legislative agenda, let鈥檚 put it that way,鈥� said Jaclynn Pehota, executive director of the Association of Canadian Cannabis Retailers.
鈥淚 remain skeptical about how much of a priority this is, in a meaningful way, for people who are actually making policy agendas.鈥�
Regardless of their chances, both bills have been shaped and informed by Canada鈥檚 experience with the legal-pot landscape, said David Culver, vice-president of global government relations for Canopy Growth Corp., based in Smiths Falls, Ont.
鈥淭hey are aware of the Canadian model and the pluses and the minuses of the system, because I talk about it all day, every day,鈥� said Culver, who routinely lobbies Capitol Hill for one of the largest players in Canada鈥檚 legal cannabis market.
Like smaller state-level markets throughout the U.S., the Canadian market has been a 鈥渃rystal ball鈥� of sorts for legislators, he said.
鈥淲e can see what鈥檚 worked and what hasn鈥檛 worked. Some of the lessons within these bills they鈥檝e taken to heart, but others they haven鈥檛.鈥�
One significant problem is taxation, Culver noted: if excise taxes are too high out of the gate, the black market for cannabis will only continue to thrive. 鈥淵ou need look no further than Canada and California to understand that years after legalization, that illicit market is still the dominant force.鈥�
The U.S. cannabis landscape is an ever-changing patchwork. The drug is legal for medical purposes in 39 states and for recreational use in 19, including D.C. 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.
That makes it impossible for companies operating in a legal 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 write off routine business expenses, capital equipment or payroll costs.
Unlike how Canada tackled legalization in 2018, social justice issues like ending criminal penalties and expunging non-violent cannabis offences are a central feature of both U.S. bills.
鈥淎lready, Canada鈥檚 kind of falling behind in that regard,鈥� said Samantha McAleese, a PhD candidate at Carleton University in Ottawa who specializes in criminal justice issues around cannabis.
The government has estimated that only about 10,000 people would be eligible under the system set up in 2019 to fast-track pardons for minor marijuana possession offences. McAleese said it鈥檚 likely that the lives of somewhere between 250,000 and 500,000 Canadians have been affected by the same charges, but most are ineligible because of other convictions on their criminal records.
鈥溾�業t would be too hard, it would be too complicated, it would cost too much money, it would take too many resources鈥欌�� was the standard response to the efforts of advocates who pushed the government for a broader, more comprehensive program, she said.
鈥淏ut when you compare that to the cost when someone can鈥檛 find a job, or when someone can鈥檛 find housing 鈥� the costs are much larger to taxpayers than a one-time investment in an automatic expungement process.鈥�
For Culver, the criminal justice reform component is the most urgent aspect of the American effort.
鈥淭he unintended consequences of inaction are severe,鈥� he said.
鈥淚f we don鈥檛 act on cannabis reform sooner rather than later, we鈥檙e going to continue to arrest hundreds of thousands of people 鈥� this year, we鈥檒l arrest over 300,000 people, again 鈥� unless reform is done.鈥�
If neither bill survives Congress, the Senate still has options, such as the SAFE Banking Act, which has already been passed by the House and would eliminate the federal barriers that deny cannabis businesses access to financial services and capital markets.
Removing those barriers 鈥渨ould be a real positive, from a Canadian perspective,鈥� said Pehota.
鈥淚t would really accelerate and expand access to basic business services like banking and insurance, which remains very, very challenging for Canadian cannabis businesses to acquire because of the illegality of cannabis at the federal level in the United States.鈥�
Legalization in the U.S. might be good for Canadian giants like Canopy and Tilray Inc. But for smaller players, the prospect of a legal market nearly 10 times the size of Canada could be a daunting one.
鈥淭he U.S. suddenly becomes both a threat and an opportunity,鈥� said Michael Armstrong, a business professor at Brock University in St. Catharines, Ont., who watches the North American cannabis sector closely.
鈥淐anadian companies who now have a couple of years of operating experience under a legal regime have learned how to mass produce. (U.S. legalization) would potentially be a big opportunity, a whole new market,鈥� Armstrong said.
鈥淗owever, it鈥檚 also a threat because right now, the Canadian industry doesn鈥檛 have to worry about American competitors.鈥�
鈥擩ames McCarten, The Canadian Press
