Trump Could Use NAFTA To Bully Canada's Emerging Weed Industry

The U.S. is cracking down on cannabis at home while pushing close allies like Israel to curb their cannabis industry. Is Canada next?

03/06/2018 11:42 EST | Updated 03/06/2018 13:03 EST

Last month, (allegedly) following a call from U.S. President Donald Trump, Israeli Prime Minister Benjamin Netanyahu delayed a long-held plan to export Israeli medicinal cannabis.

It was a troubling moment for Canada's cannabis sector, as it signals the possibility that he may try a similar direct or indirect tactic to hamper Canada's own legal cannabis and export industry.

Nir Elias / Reuters
An employee sorts freshly harvested cannabis buds at a medical marijuana plantation in northern Israel March 21, 2017.

Israel is a world leader in the cannabis space and was uniquely positioned to enter the export. "The seriousness with which the Israeli scientific community approaches this is incomparable," Charles Pollack, a medicinal cannabis expert at Thomas Jefferson University, told Rolling Stone recently. Israel's leadership prompted Bill Nye the Science Guy to produce a show looking at "How is Israel healing the world with marijuana."

Now Israel's preeminent position in the sector is in question. Just last week, the Israeli cannabis sector took the Israeli government to court to break the logjam.

Meanwhile, Canada is preparing to legalize recreational cannabis and further expand its lead in the worldwide cannabis sector. Health Canada has granted several Canadian companies licenses to export, and it is expected that by the end of this month, a total of 528 kilograms of dried cannabis flower and 911 litres of cannabis oil will have been exported this year. Destinations for Canadian-grown cannabis included Australia, Brazil, Chile, Croatia, Cyprus, Germany, the Netherlands and (interestingly) Israel.

If Canada's budding cannabis industry wants to step onto the world stage, it should learn from Israel's experience in dealing with the U.S. pressure on this important file.

To put it bluntly, the "war on drugs" is still going strong for the Trump Administration.

Despite the shift the legalization, the war on drugs is not over.

Nine states plus Washington, D.C. have adult-use recreational cannabis regulations. Twenty-nine states have some form of medical cannabis. But neither recreational cannabis nor medicinal cannabis are legal federally in the U.S. — making banking, accessing capital markets and inter-state and international trade illegal.

Canadians should not be overly optimistic on how the industry is viewed by the U.S. because, to put it bluntly, the "war on drugs" is still going strong for the Trump Administration.

Attorney General Jeff Sessions has rescinded guidances from former U.S. President Barack Obama's administration that allowed states to legalize marijuana with minimal federal interference. What this means is that federal prosecutors can use their own discretion to crack down on cannabis businesses legal in that specific state.

For Canadians, it shows just how volatile an issue cannabis remains.

How does NAFTA fit into it?

We know how the broader conversation is going: In early February, President Trump was whining that "... Canada does not treat us [the U.S.] right." Last week alone, Trump said, that Canada was "very smooth" in negotiating NAFTA in the past and has been "very rough" and "taken advantage" of the U.S. He continued to set the international trade world ablaze with the promise of sweeping tariffs on key steel and aluminum.

If President Trump is leaning on his own administration to crack down on cannabis while at the same time pushing close allies like Israel to curb their cannabis industry — with NAFTA renegotiations at their mid-point, will the question of Canadian cannabis exports be the issue that is the final nail in the coffin of NAFTA? Or will the U.S. president ignore Canada's burgeoning industry and focus on other issues like dairy, meat and softwood lumber?

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The Canadian opportunity

This year, Canada will become the largest country in the world to legalize adult-use recreational cannabis. This is added to the nearly 300,000 patients who already receive legal medical cannabis in Canada.

With a turbulent and aggressive U.S. foreign policy in place — one where the U.S. is bullying allies to curb their cannabis sectors and cracking down domestically — the opportunity presents itself for Canada to lead internationally on something that our largest trading partners have conceded on: cannabis.

Canada leads the world in some very compelling ways — maple syrup production, NHL players and, now, cannabis. These are things that President Trump cannot take away.

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