Will Trump’s America lose out on the next big thing in business? Will Trump’s America lose out on the next big thing in business? Blair Gable/Reuters

US could lose out in budding pot market

Mexico and Canada in a position to benefit from lucrative marijuana industry

The president of the United States, Donald Trump, prides himself on his business acumen. But his protectionism may get America a truly bad deal when it comes to North America’s next big market: marijuana. The Conversation

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Fulfilling a campaign promise, on April 13 Canadian Prime Minister Justin Trudeau presented a bill to legalize cannabis for recreational uses (medical marijuana has been legal in the country since 2001).

Two weeks later, Mexico’s Congress followed suit, passing a bill to authorize cannabis use for medical and scientific purposes.

Two of three North American countries are now well positioned to unlock an industry that, according to Forbes magazine, was worth an estimated US $7.2 billion in 2016 and is projected to grow at a compound annual rate of 17%.

In the U.S., on the other hand, a protectionist administration has threatened to withdraw from the “terrible” North American Free Trade Agreement (NAFTA) and actively relaunched the U.S. drug war. It looks like America’s businessman president may allow his country to miss out on the cannabis boom.

Medical marijuana research is a growth industry. Cannabinoids, a main (non-psychoactive) chemical component in marijuana, hold significant prospects for development in the pharmaceutical industry, as potentially does tetrahydrocannabinol (THC), the ingredient that makes users feel high.

Marijuana has been scientifically proven to soothe the effects of chemotherapy, treat glaucoma and ease some chronic pain. But many fields of inquiry remain untapped, thanks in large part to stringent U.S. laws that classify cannabis as a Schedule I drug. That’s the most tightly restricted category, reserved for substances with “no currently accepted medical use.”

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Pharmaceutical companies are keen to further disprove that thesis, knowing they will soon be able to patent cannabis-based medicines in both Mexico and Canada. Patients and doctors, too, have pleaded for restrictions on medical marijuana research in the U.S. to be eased.

In the U.S., eight states and Washington, DC, have also legalized recreational marijuana. A total of 29 states plus the nation’s capital have legal medical cannabis.

But U.S. Attorney General Jeff Sessions (who has declared that he “rejects the idea that America will be a better place if marijuana is sold in every corner store”) and Homeland Security chief John Kelly (who has erroneously called marijuana a “dangerous gateway drug”) consistently overlook this fact.

The Trump administration is determined to revamp prohibitionist policies. In a radical rollback of Barack Obama’s compassionate approach to nonviolent drug offenders, Sessions has actually ordered federal prosecutors to charge suspects of any drug-related crime with the “most serious, readily provable offence,” or whichever crime entails the harshest punishment.

This move will have well-documented implications for law enforcement. In 2015, marijuana arrests outweighed those made for all violent crimes combined, including murder and rape, 574,000 to 505,681, according to the NGO Human Rights Watch.

Now America’s drug war will have commercial consequences too. In the U.S., the National Institute on Drug Abuse has developed research mainly on the negative effects of cannabis, only marginally considering its potential medical uses.

Medical trials conducted on human beings require permission from several federal agencies, including the Department of Health and Human Services, the Food and Drug Administration and, when it comes to illegal substances, the Drug Enforcement Administration. That makes getting clearance for cannabis trials unduly complicated.

The inconsistencies between federal and state legislation also discourage research because they do not offer a secure legal ground for patenting cannabis-based medicines. Potential investors in medical cannabis are forced to consider not only corporate competition but also criminal prosecution.

Likewise, because budding American cannabis producers struggle to access investment funding, the industry’s growth potential remains stunted.

If all of this sounds bad for American investors and patients, it’s good news for Mexico and Canada.

The Mexican medical marijuana bill championed by President Enrique Peña Nieto, who is not a bold politician, is quite limited. It emerged in response to the story of Grace, a profoundly epileptic eight-year-old girl for whom cannabis oil, illicitly administered by her desperate mother, proved a literal lifesaver.

By removing from cannabis the legal label of “forbidden plant,” the law will enable it to be used for medical or scientific purposes and permit the health secretariat to conduct clinical research.

In legal terms, Mexican cannabis is now a commercial good that falls under NAFTA’s purview. Medical cannabis is estimated to bring in between $1 billion and $2 billion to Mexico over the next 10 years.

Canada is making a bigger bet on marijuana. Once its cannabis-regulation bill is implemented in July 2018, it will become the second country in the world to fully legalize marijuana, after Uruguay. It will stop short of establishing an open market, though; provinces will decide where and how marijuana may be sold and priced, in conjunction with the federal government.

As in Mexico, Canadian cannabis will comprise a commercial good. Its medical marijuana market is expected to be worth $1 billion by 2020, while recreational marijuana prospects run as high as $22.6 billion.

Once both countries’ systems are up and running, cannabis trading between Mexico and Canada can begin. The world’s first cannabis-focused exchange traded fund has already opened on the Toronto Stock Exchange.

In theory, Canada and Mexico could also trade medical marijuana with dozens of U.S. states. But given the current administration’s “America First” motto, anti-Mexico rhetoric and fear-mongering about drugs, that may prove difficult.

The federal government is also forcing the U.S. to miss out on something more valuable than profit: improving public health and social well-being.

Drugs in general and cannabis, in particular, can do harm if misused. But they are far less dangerous than the drug war itself. After all, the health risks associated with legal cannabis can be prevented by strict packaging and labelling guidelines.

For Canada, which has long been progressive in its drug policy, cannabis legalization should continue to reduce the harm created by the illicit drug trade.

Mexico’s bill has more radical implications for health and public safety. An average of 51 people die every day in the country’s violent drug war. That’s so many homicides that male life expectancy has actually dropped by more than half a year since 2010.

For many Mexicans, the revenue from medical marijuana is less important than the possibility of rolling back the deadly drug war. The country’s timid steps towards legalizing medical marijuana have begun a critical process of democratic deliberation around using the military for law enforcement in the war on drugs.

As for the U.S., it needn’t miss out. If only to keep America from falling behind Canada and Mexico, a scenario that would haunt its president, Trump could take action to improve the health, wealth and safety of his people. And that, to use his own words, would actually be a “fair deal for all.”

Luis Gómez Romero is a senior lecturer in human rights, constitutional law and legal theory at the University of Wollongong, Australia. This article was originally published on The Conversation.

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  • Güerito

    Mexico literally is in flames. In a state of advanced social decomposition.

    Yet MND publishes consecutive editorials criticizing US drug policy, which is ahead of Mexico in terms of legalization. In fact, US drug legalization is probably responsible for some of the increased violence in Mexico, as cartels seek other sources for income.

    The news out of Mexico in the last few months involves stories of mayhem related to gas pipeline theft and increased violence in certain parts of the country (mostly tourist areas) due to disputes over local retail drug sales, extortion and kidnapping.

    Can we get a serious analysis of any of that?

    • csb4546

      Cartels will never allow commercialization of marijuana for profit and tax revenue in Mexico.
      They’ll destroy any government or private commercial crops, and threaten or kill anyone who works there.
      Why isn’t that obvious to everyone?

    • Glen Olives

      You’ve been avoiding me Guerito. I feel slightly slighted. Kidding. Per usual, you make some salient points. As you might imagine, though, I have a couple of objections. First, Mexico is in an advanced state of social decomposition? I don’t know about that. While a cursory view of the crime beat headlines certainly might suggest that, one must remember that this is a country of 120 million people with an economy that is continually improving. (We can argue about that as we have in the past.) But more importantly, in the US it’s not about what Sessions “might” do. He’s already done it, and that is his right to set policy for the Justic Dept. Has the legal cannabis business in the US been responsible in part for increased crime in Mexico? That seems like a reasonable conclusion. But in my view somewhat point missing. I’ll go back to my now familiar refrain: beer distributors are not killing each other over traffickiing routes because beer is legal, regulated, and controlled. Courts, and not bullets, remain better means to resolve business disputes.

      • David Nichols

        Surely you are not suggesting Glen, that the Courts in Mexico are a fount of fair, impartial, and speedy justice for those with civil disputes…? It was British PM Gladstone who said “Justice delayed is justice denied”
        Thus the ponderous pace of the Mexican legal system denies justice to far too many litigants.
        “Better than bullets”. Yes I would agree with that, but it sets the bar pretty low, don’t you agree?

        • Glen Olives

          Yes, I would agree to both contentions. Mexican courts are not reliable impartial arbiters of civil disputes. And also yes, they are better than bullets. And you’re right, that would be setting the bar pretty low. But as a pragmatist, I believe that we have to deal with the world we have, not the one we wish we had.

      • Güerito

        Hey, Glen,

        I haven’t been avoiding you. My trenchant commentary to your March editorial is available for all to see, thanks to your link in Tuesday’s post.

        • Glen Olives

          Where’s the American mafia today? It seems to me it’s mostly a social club of petty criminals running small time rackets. Certainly not what it was in its heyday during prohibition. Of course there will always be criminality, the only question is at what scope and scale.

          • Güerito

            Prohibition was lifted in 1933. So, yes, after about three generations, the Italian-American mafia is not what it used to be.

            All along I’ve said that true, complete drug legalization, in both Mexico and the US, might result in lower levels of violence – after a generation or two. But even this is contingent on Mexico cleaning up its criminal justice system. Something that will also probably take a generation or two, if it hapens at all.

          • Glen Olives

            It’s difficult to say, but I guess I couldn’t really disagree with your assessment. I deeply suspect, though, that the debate is purely academic. I don’t think there will be a major policy shift within our lifetimes.

          • Güerito

            This also has been one of the key points I’ve emphasized throughout. At best, in our lifetimes, we’ll see complete marijuana legalization in the US and marijuana de-criminalization or some form of legalization in Mexico. But, heroin, cocaine, meth – forget it.

      • csb4546

        Glen, can you speculate on the response of the cartels to “legalization, regulation, and control”?
        I can’t imagine that they will be passive in the face of the loss of a major revenue stream.
        Any government or private commercial weed operation would be a major target, wouldn’t it?
        From my perspective, unless/until the cartels are gone, legalization can’t work in Mexico.

        • Glen Olives

          It seems apparent that an illegal drug trade is demonstrably more profitable than a legal drug trade. They would not like legalization, regulation and control. On the other hand, eliminating the cartels is a fool’s errand. In the long term, the cartels would go the way of the bootleggers during Prohibition. During this transition, though, it would be very bloody and very messy, but it’s hard to imagine it being bloodier and messier than it is now.

          • Güerito

            Glen, here you’ve essentially conceded my point. That “very bloody and very messy” transition is the rest of our lives, at a minimum.

          • Glen Olives

            Yes, I’ve conceded your point, to a point. The caveat is that I just can’t see how this hypothetical transition would be worse than what we have now. And even it it was (impossible to really know), the net result for future generations would be far better.

          • csb4546

            I agree, I can’t conceive of a solution in the next decade or more – since we’re seeing absolutely no progress now – in fact things are worsening rapidly. How do you completely clean out the local and state governments as well as local police/security forces in an entire country?
            That’s presuming the federal government could be trusted to do the job.
            Can they? Nope. Seems hopeless – very disheartening for Mexico.

          • Güerito

            You’re correct.

  • taxpayer22

    April 20 : the Pot heads celebrated Hitler’s Birthday.

  • Stylez

    The US is already way ahead of Mexico and Canada in the cannabis game. Many states you can walk into a store and pick out pot from 20+ different strains of *the best pot in the world*. We don’t need cheap Mexican pot. and will not suffer without it.

    We also are enjoying the local jobs and economy from having our MJ grown local.

    • csb4546

      Correct – it’s already too late for Mexico to capitalize on marijuana legalization in the US or Canada.

  • csb4546

    Why would America need or want Mexican pot imports?
    The US can grow its own weed at home – what’s the incentive to share the market with Mexico?

  • csb4546

    Mexican legalization of marijuana with the goal of commercial operations and tax revenue sounds good, but –
    it would result in a simple reversal of current roles.
    Today the government looks for, finds, and destroys cartel marijuana fields, perhaps also arresting the field workers.
    After legalization, the cartels would look for, find, and destroy government marijuana fields – and kill the workers.
    Is that really an improvement over the current situation?

  • Stylez

    The only way I see for Mexico to capitalize on legal MJ now is to offer it in the tourist areas. Have a joint with your Corona or Margarita.

    • csb4546

      Great idea! BUT – it better be cartel weed, or somebody’s gonna die.

      • Stylez

        Let’s not get crazy, Of course it will be cartel weed.

    • csb4546

      cartels won’t sit quietly for that – it better be their weed, and they get paid or somebody will die

  • alance

    Commercial cannabis is also perceived as a threat to healthcare providers from physicians, hospitals, pharmaceutical companies and drug rehab centers to distillers and brewers of alcoholic beverages.

    In many ways, Mexico is a very conservative nation that does not welcome change.

  • David Nichols

    “Budding American cannabis producers”. I see what you did there..!

  • owl905

    “In the U.S., on the other hand, a protectionist administration has threatened to withdraw from the “terrible” North American Free Trade Agreement (NAFTA) and actively relaunched the U.S. drug war.”
    El Trumpo sent the notification letter to Congress yesterday. Only a few media sites picked it up, but it’s actually firing the first shot in a North American trade war.
    Mexico doesn’t need to catch up to the USA to be competitive. It needs to catch up to Canada. Mexico needs the same kind of aggressive agenda on legalizing pot as Canada (July 2018?). The same spirit that applied to cleaning up the smog in Mexico City needs to be generated for legalizing the recreational use of pot.
    And the big prizes aren’t foreign export markets – the US will be moving to synthetic THC products before the West turns green. The big prizes are sanity about marijuana; revenue streams going to the economy instead of the black market; and a slam-dunk winner for the tourist trade (just ask Holland).

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