Legal pot may come with significant risks for investors

Legal pot may come with significant risks for investors

Legal pot may come with significant risks for investors

Canada’s pot industry investors and cannabis connoisseurs alike should take the significant powers accorded to U.S. border officers into account, according to Mike Niezgoda, a spokesman at the U.S. Customs and Border Protection office in Buffalo.

“Working or having involvement in the legal marijuana industry in U.S. states where it is deemed legal or Canada may affect an individual’s admissibility to the U.S.,” Niezgoda told Bloomberg.

“Although medical and recreational marijuana may be legal in some U.S. States and Canada, the sale, possession, production, and distribution of marijuana remain illegal under U.S. federal law,” Niezgoda added.

This essentially means that any Canadian, who has used the drug before the Cannabis Act comes into effect on October 17, trying to cross the border is under pain of U.S. legal penalties – a problematic situation at best, considering that an estimated 4.6 million Canadians regularly partake of pot.

Weed company executives, in particular, are at high risk as they might be accused of trying to cultivate the cannabis trade within U.S. borders.

Border guards are empowered to ask people about their current and past drug use, and they have the authority to bar cannabis users from entering U.S. territory for life. Lying to these officials is also a crime.

Read more: Canadian pot stocks are on a roll

“A lot of people don’t understand that they are still going to have problems after legalization,” according to Henry Chang, partner at Blaney McMurtry LLP in Toronto who handles immigration law on both sides of the border.

“You need to stay off the radar -- if there’s something that prompts them to think that you are a marijuana user, the first question will be: ‘Do you smoke marijuana?’”

Investment in Canada’s recreational marijuana went into overdrive last month with Corona beer marker Constellation Brands Inc.’s announcement of a $3.8 billion stake in cannabis giant Canopy.

RioCan Real Estate Investment Trust has previously estimated that legal pot can foster demand for as much as 200,000 square feet (19,000 square metres) of retail space nationwide.

In particular, Ontario and Alberta are predicted to enjoy the greatest fiscal benefits of the federal Cannabis Act. Legalization is expected to drive the opening of a much-increased number of facilities in Ontario, already a preferred provincial destination among cannabis producers and sellers.

Marijuana is also forecast to pull down vacancy rates in Calgary’s commercial/industrial segment in the near future, according to Barclay Street Real Estate.