Trade negotiations between Canada and the United States have not been going well, but good news for cannabis may emerge from the rubble heap.
For starters, U.S. tariffs on Canadian steel and aluminum have caused significant upheaval in the form of “dollar-for-dollar” retaliatory tariffs on the U.S. — and those issues were just the appetizer.
The main course has been delivered by way of the North American Free Trade Agreement (NAFTA). The original treaty between Canada, the United States, and Mexico took effect January 1, 1994, and was designed to eliminate trade barriers, such as tariffs, for international investments.
President Donald Trump has repeatedly voiced his displeasure with NAFTA, once calling the deal the “worst trade deal” ever made during a debate with Democratic candidate Hillary Clinton. He has acted on these sentiments since entering the White House by trying to renegotiate, and even terminate, the agreement.
Regardless of whether you’re a Trump supporter, if you’re reading this with a joint between your fingers, you may be wondering: “Will this somehow affect weed?” And it just might, but for the better if you’re Canadian.
Canadian and Mexican Cannabis Industries Could Potentially Benefit From A Failed NAFTA Agreement
Matt Maurer, vice chair of the Cannabis Law Group with Toronto practice Torkin Manes LLP, told Marijuana.com that if NAFTA falls or is drastically renegotiated, it’s possible the cannabis sector could be affected in some way.
“First we have to think about whether cannabis is the type of product that would be specifically dealt with in a trade agreement,” he said.
Maurer referred to the difference in legal status for cannabis in Canada and the U.S. “[Cannabis] is still illegal in the United States at a federal level. So clearly, at least for the time being, one would think there would be no inclusion of cannabis in the NAFTA agreement. It’s not going to be shipped to and from the United States in any meaningful way in the not-too-distant future.”
Maurer then introduced a fascinating prospect.
“If NAFTA [doesn’t] materialize, and instead what you had was one agreement between Canada and the United States, another between Canada and Mexico, and a third agreement between Mexico and the United States, that actually might be a little more interesting.”
Maurer attributes the possibility to former Mexican President and Khiron Life Sciences Corp. board member Vicente Fox saying he predicts recreational cannabis will become legal in Mexico next year. Fox even went as far as stating that he wants cannabis included in the NAFTA agreement, should it survive.
“We can change criminals for businessmen, we can change underground, illegal non-taxpayers into an industry, a sector of the economy,” Fox told Bloomberg on Aug. 30, 2018. “I think it should be part of NAFTA and that’s what I’m pursuing.”
Maurer believes that an agreement between Canada and Mexico on recreational cannabis could be a bigger possibility if the countries decide to end NAFTA and do individual deals with each other.
“If Mexico legalizes [recreational], now you’re maybe looking at having an agreement between Mexico and Canada that would allow the import and export of cannabis,” said Maurer. “It provides a more clear path to an international agreement with another country, because it would give [Canada] the opportunity to do a deal directly with Mexico.”
Without NAFTA, the US Loses Leverage
Additionally, if NAFTA is terminated, Trump would arguably have less power to bully the Canadian marijuana sector.
Back in February 2018, The Jerusalem Post reported that President Trump allegedly called Israeli Prime Minister Benjamin Netanyahu to voice his disappointment with Israel’s plan to export medical cannabis out of the Middle Eastern nation. As a result, Israel delayed its plans for fear of getting on Trump’s bad side.
If Canada and Mexico were joined at the hip to the U.S. through NAFTA, America has more leverage to threaten the Great White North into making concessions over the continued expansion of its cannabis industry. It could potentially harm trade with the United States and, by proxy, with Mexico as well.
Without NAFTA, at best, trade with the U.S. will be rocky, like the dollar-for-dollar tariffs on steel for example, but that seems to be happening anyway.
So cannabis lovers can breathe a sigh of relief. If NAFTA fails and new deals are put in its place, the result probably won’t be great as a whole, but for weed, you’ll be in the clear. That’s a good thing — because it looks like based on these negotiations, we’re all going to need it.
Jon Hiltz was a journalist for Marijuana.com for two years and is now director of business development for INDIVA, a licensed cannabis producer in Ontario, Canada.