Pubdate: Fri, 05 Jan 2018
Source: Hamilton Spectator (CN ON)
Copyright: 2018 The Hamilton Spectator
Author: Armina Ligaya
Page: A10


U.S. pot enforcement policy could give companies north of the border
an advantage

A move by the U.S. Attorney General to quash an Obama-era policy that
allowed legalized pot to flourish south of the border dealt a blow to
marijuana stocks Thursday, but observers and industry players say the
crackdown is a boon for the Canadian cannabis industry.

On Thursday, Jeff Sessions rescinded the 2013 Obama administration
guidance that suggested the federal government would not intervene in
U.S. states where the drug is legal, which has opened the door for
several states to legalize pot for medical and recreational purposes.

In a new memo, President Donald Trump's top law enforcement official
said he will instead let federal prosecutors where marijuana is legal
decide how aggressively to enforce federal law, which still prohibits
the drug.

Several marijuana stocks saw a double-digit pullback on the news, with
Canada's biggest licensed producer Canopy Growth down as much as 19
per cent before regaining lost ground by the end to close down nearly
10 per cent at $32.32.

Marijuana producer Aphria Inc., which has some U.S. exposure, was down
as much as 22.6 per cent but closed down 13.79 per cent at $18.50.

Echelon Wealth Partners analyst Russell Stanley said if marijuana
continues to be illegal at the federal level, it will benefit Canada
as this will suppress the rise of any large U.S. cannabis companies to
challenge Canadian marijuana producers as they expand globally.

"It keeps the United States out of that game and it allows Canada to
pursue these opportunities with relatively little competition," he

Under U.S. federal law it remains illegal to cultivate, distribute or
possess the drug but the Obama administration guidance had seen more
than two dozen states legalize medical marijuana, with California the
latest state to legalize the recreational use of weed as of January

Cam Battley, the executive vice-president of Edmonton-based licensed
marijuana producer Aurora Cannabis Inc., called Sessions's stance
"misguided public policy" that is counter to broader U.S. public opinion.

However, he also said this will drive additional U.S. investment and
investors north of the border.

"It cements the fact that we will not be seeing for the foreseeable
future, well-capitalized U.S. competitors as we expand our operations
around the world," said Battley.

"And it just prolongs that unusual situation, where large-cap Canadian
cannabis companies have the world to ourselves."
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MAP posted-by: Matt