The Seattle Times reports prosecutors there say they don't have enough evidence to support the charges against Michael Sean Stanley.
Seattle police arrested Stanley on Oct. 22 after a series of calls about noise in a west Seattle alley.
Stanley was accused of threatening someone who asked him to be quiet, but after his arrest, he was also accused of luring a 16-year-old boy to an alley, giving him alcohol and sexually assaulting him.
He is currently serving a sentence for harassment and resisting arrest, but the newspaper reports that he is scheduled to be released next week.
U.S. officials allowed Stanley, who is a U.S. citizen, into the country after determining he was not the subject of an extraditable arrest warrant.
The prosecutor's office in Seattle announced its decision on Friday.
"Attempts to prove the case through forensic science were unsuccessful," Dan Donohoe, a spokesman for Prosecutor Dan Satterberg, told the Seattle Times.
"There were multiple inconsistencies ... there was insufficient evidence to prove a forcible sexual assault occurred."
Stanley has a criminal record in Canada that dates back to 1987. He last received a 32-month prison term for assault and forcible confinement involving two mentally challenged boys.
Parole board records say he lured the boys into a washroom, blew crack smoke in their faces and then sexually assaulted them.
Parole records also detail the sexual assault of an elderly woman and charges he exposed himself to kids.
Police in Edmonton said they warned their U.S. counterparts in October that Stanley might try to cross the border after finding his electronic-monitoring bracelet had been cut off in Lloydminster, on the Alberta-Saskatchewan boundary.
Alberta Justice said it would not seek Stanley's extradition to Canada because the breach of recognizance, mischief and driving charges he faced north of the border didn't "warrant engaging the extradition process."