There are alternatives for Canadian hashish corporations within the US, even when federal legalization lags behind

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CBD is the place to be, writes cannabis industry insider Omar Khan.

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Omar Khan Companies looking to expand their presence south of the border have plenty of opportunities in the legal hemp CBD area.  /. Companies looking to expand their presence south of the border have plenty of opportunities in the legal hemp CBD area. /. Photo by Getty Images

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The results of the 2020 US election sparked a wave of excitement among Canadian cannabis companies looking to seize business opportunities south of the border.

With the Democrats retaining their majority in the House of Representatives while taking control of the Senate and White House, it seemed to occasional observers that full federal legalization might be just around the corner. This is still possible, but by no means certain.

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Fortunately, in the legal hemp CBD space, there are plenty of opportunities for businesses to expand their presence south of the border.

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But more on that in a moment.

To understand why extensive federal legalization is far from complete in the US, it is important to look at the current state of US politics.

To legalize cannabis, both Houses of Congress must pass laws that would later require the President’s signature to become law. Since the members of the House of Representatives are re-elected every two years, the democratic legislators there are much more susceptible to pressure from their political base, which largely supports an end to the ban.

There are also a handful of Republicans with libertarian leanings who are okay with cannabis reform. These include David Joyce of Ohio and Don Young of Alaska, who tabled a bill last week to legalize cannabis in a similar way to alcohol. If it were just the House of Representatives, cannabis would likely be legalized by the end of this year.

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Unfortunately, the Senate and President Joe Biden also have to agree.

The Democrats have a precarious majority in the United States Senate. Although both Democrats and Republicans currently have 50 Senators each, relations are cut by Vice President Kamala Harris. As such, one might think that even with a majority of one vote, Democrats would be able to enforce legalization. Unfortunately, the Senate’s arcane rules make this difficult.

A majority of 60 votes out of 100 is required to pass most laws. This means that even if every Senate Democrat were on the side, another 10 Republicans would have to be recruited for the effort.

While some Senate Republicans like Kentucky’s Rand Paul are compassionate, there are currently only a handful who would even consider voting for full legalization.

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In addition, some conservative Senate Democrats like Joe Manchin of West Virginia seem to have reservations. It is becoming clear that the Senate’s passage of a comprehensive cannabis reform bill remains an uphill battle.

Let’s assume for a moment that cannabis reform advocates can get 60 votes in the Senate. Any laws that come through Congress would have yet to be legally signed by President Biden. Although Kamala Harris, who was the main Senate sponsor of the Marijuana Opportunity, Reinvestment and Expungement Act prior to her election as Vice President, what many have cited as the most far-reaching legalization proposal of late, President Biden was lukewarm to the idea of ​​opting for decriminalization and deletion instead focus on criminal records.

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What does this all mean for Canadian cannabis companies looking to grow their business in the US? Put simply, they shouldn’t base their business plans on the inevitability of federal legalization in the near future. However, this does not mean that there are no significant opportunities in the US

Since the so-called US Farm Bill of 2018 removed hemp from the definition of marijuana in the Controlled Substances Act, the manufacture and sale of CBD products made from hemp is permitted nationwide. Since then, US consumer demand for these products has grown steadily.

Kelly Neilson, vice president of insights and analysis at cannabis research firm BDSA, recently told Marijuana Venture that he expects hemp-derived CBD sales in the US to reach $ 6.8 billion in 2021 (Aug. , $ 2 billion) and grow to $ 20.5 billion ($ 24.7 billion) by 2025.

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To put this in perspective, Statistics Canada reported that total Canadian cannabis sales in all product formulations in 2020 were $ 2.6 billion. New Frontier Datarecently reported that nearly 90 percent of Americans are familiar with CBD and about 20 percent have consumed it.

These data speak for themselves.

While it is important for Canadian cannabis companies to monitor the legal situation in the US and be ready to take advantage of legalization if it happens, the smart industry players looking to increase shareholder value today will focus on what is already legal and in demand.

When it comes to increasing profitability while complying with US federal law, CBD is the place.

Omar Khan is senior vice president of corporate and public affairs for High Tide Inc. (TSXV: HITI) (OTCQB: HITID) (FRA: 2LY), a retail-focused cannabis company that assists through the manufacture and sale of consumer accessories becomes.

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