11/07/2012 06:39 EST | Updated 01/07/2013 05:12 EST

Washington Pot Legalization: BC Impact Remains Unclear

LOS ANGELES, CA - SEPTEMBER 7: A budtender handles marijuana at Perennial Holistic Wellness Center, a not-for-profit medical marijuana dispensary in operation since 2006, on September 7, 2012 in Los Angeles, California. A group of activists have submitted about 50,000 signatures in an effort to force a referendum on a marijuana dispensary ban in Los Angeles to take effect next week. A minimum of 27,425 valid signatures from registered voters is needed to let voters decide on the issue in March, and until the number can be verified, the ban will not be enforced. . The ban would not prevent patients or cooperatives of two or three people to grow their own in small amounts. Californians voted to legalize medical cannabis use in 1996, clashing with federal drug laws. (Photo by David McNew/Getty Images)

VANCOUVER - The future appears hazy for British Columbia's thriving underground pot industry, even as two U.S. states have voted to allow citizens to legally use the drug recreationally.

Business consequences could range from mild to sending marijuana producers' livelihoods up in smoke, depending on how much of the estimated $6 billion to $8 billion annual economy is currently being exported south of the border, analysts say.

Opinion on the impact varies considerably, but those advocating for Canada to adopt a more evidence-based policy on marijuana say this week's votes mean Canada is falling behind the U.S. in developing evidence-based policy.

Voters in Washington State and Colorado passed ballot initiatives held alongside the U.S. presidential election on Tuesday that remove criminal penalties for the possession and sale of recreational marijuana. Should the U.S. federal government not challenge the initiatives, which directly opposes federal rules, the states will begin regulated sales of the drug.

A similar initiative in Oregon failed to pass.

"Obviously we're not sending the army to the B.C.-Washington State border because of the vote," said Dr. Evan Wood, founder of an ongoing campaign for marijuana legalization that includes health, legal and justice professionals.

Canadian opponents of legalization have often noted that decriminalizing pot would prompt a negative reaction south of the border that could make it harder for goods and people to cross back and forth, Wood noted.

"This vote is obviously going to take that tool away that I think has quite successfully quashed debate on this topic in Canada."

The coalition, called Stop the Violence BC, contends prohibition of marijuana is a failed strategy that fuels bloody gang wars and facilitates the influx of guns and cocaine when it's traded into the U.S. via organized crime.

The value of the export pot market cannot be easily quantified because it's based on smuggling. But experts who believe it's hefty argue the market for well-known "B.C. bud" will shrink simply because it won't be in such high-demand anymore in places like neighbouring Washington State, where users will be able to make legal purchases.

"It may not wipe out the entire market but probably wipe out most of it," said University of B.C. economics Prof. Werner Antweiler, who says a substantial amount of B.C.'s marijuana — in the range of two-thirds — is pushed into the U.S. west coast.

If that is the case, he said the impact would be felt most in the B.C. Interior, where a sizable quantity of the illegal crop is cultivated.

"They will lose production. These communities will suffer certain amounts of setbacks in terms of the economic welfare, simply because this money that's being made is percolating in those communities," Antweiler said. "If you take $8 billion dollars and even take 20 per cent off or 30 per cent off, it will have a somewhat noticeable impact."

RCMP, however, say the "majority" of marijuana cultivated in both Canada and the U.S. is produced to support domestic demand, according to 2004 border drug threat assessment. Although police say Canadian-produced marijuana accounts for only about two per cent of overall U.S. marijuana seizures, they note authorities on both sides are concerned and have found it to be an upward trend.

One long-time marijuana activist in Nelson, B.C. — an Interior city that has a reputation for its pot industry — argued the state ballot initiatives won't be consequential for the B.C. market at all.

"The whole B.C. bud phenomenon, this cross-border thing, is blown out of proportion," said Dustin Cantwell, who has hosted a weekly local radio program about drug policy for 13 years.

"We have enough people smoking marijuana in our country who are willing to pay money for it to make (the industry) worthwhile here. We no longer have to cross the border, and there's no longer American people coming up to buy weed up here."

Former B.C. Attorney General Geoff Plant, who supports the Stop the Violence coalition, said he believes the initiative could have some impact on the pot market, but agreed other buyers are always available.

"It's not going to be transformative," he said. "Washington is certainly a market of some size for B.C. bud, but the whole of the United States is the market for B.C. bud.

"We're not going to put an end to organized crime to control the cannabis market in British Columbia until we get policy change here in Canada and in the United States."

Plant and the coalition argue it's crucial to change Canadian law so the underground economy will come to the surface, where marijuana can be produced, regulated and taxed under strict government control.

In Washington, some of the tax revenue from potential sales would be earmarked for addictions programs and other health initiatives, and the coalition believes the same should happen in Canada.

A day after the initiatives were passed, a spokeswoman for federal Justice Minister Rob Nicholson reaffirmed that the Conservative government does not support the decriminalization or legalization of marijuana.

"Our government will continue to work with our American neighbours to ensure that our border is open to trade and closed to criminal activity," Julie Di Mambro said in an email.

A 2003 committee report to the Senate on illegal drugs pegged the B.C. industry at $6 billion, while the Fraser Institute estimated in a 2004 analysis it generates $7 billion annually.

A report by the University of the Fraser Valley's Centre for Public Safety and Criminal Justice research said B.C. pot grow ops generate $3.6 billion.

Also on HuffPost

Photo gallery 16 Facts About Marijuana And The U.S. Economy See Gallery