Cannabis industry players in the U.S. are concerned that the stubborn insistence on prohibition by the federal government will give Canadian producers a chance to dominate the marijuana industry.
These sentiments were voiced by Derek Peterson, the CEO of marijuana firm Terra Tech based in California. He revealed that industry players in the U.S. are constrained by many factors which put a damper on their growth and activities.
First, cannabis cannot cross state lines since marijuana is still outlawed at the federal level. This restriction means that producers must operate at low capacity just for the market within the state where they are licensed to operate.
Secondly, the players in the marijuana industry cannot access funding from major banks since the banks fear federal repercussions resulting from doing business with an industry that is considered illegal. Marijuana companies therefore face funding challenges each time they want to expand or conduct expensive product research. In contrast, Canadian firms are trading publicly and amassing capital.
The third impediment is that Customs and Border Protection has vowed to deny entry to any marijuana industry investors. This has deterred some foreign nationals who may have wished to put their money in U.S. cannabis companies.
These shortcomings have given a chance to Canadian companies to spread their operations to the U.S. For example, Tilray was recently permitted to export marijuana extract capsules for use during a study on the impact of cannabis on essential tremor. This was after the researchers convinced the DEA that such products weren’t available locally.
Such inroads are likely to grow over time since Canada has had a head start due to the forward-looking regulatory framework that was passed in Canada upon the legalization of medical cannabis years back and the impending decriminalization of adult use of marijuana a few days from now.
Private firms were allowed to participate in the industry right from its legalization, and that private enterprise has permitted Canada to be a world leader in this young industry. In contrast, the U.S. has for long allowed only Mississippi University to hold the sole license for cannabis cultivation until states started decriminalizing marijuana and licensing their own producers.
The U.S. is therefore having to play catch up with Canada, but the federal prohibitionist stance still limits how quickly the domestic industry can grow since the players are fragmented and can only operate in small jurisdictions. The large U.S. market will only be exploited fully for rapid growth once cannabis is legalized at the federal level. That decriminalization will allow firms like Koios Beverage Corp. (CSE: KBEV) (OTC: KBEVF) and Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP) to put all their energies in capturing the massive potential market across the nation.
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