US dope growers shut out of thriving global market
In a large warehouse, LivWell Enlightened Health feeds its cloned cannabis plants a customised blend of nutrients, sprays them with filtered water, pumps extra carbon dioxide into the air, and releases three types of insects to get rid of unwanted pests without the use of toxic pesticides. Every part of the growing process is meticulously documented and evaluated to refine the process.
After 20 years of experience, legal cannabis growers in the US say they produce some of the best product in the world, scientifically grown and tightly regulated for quality and safety.
The crop would be in high demand internationally – perhaps the centrepiece of a new US industry – if not for the regulatory conundrum in which growers operate.
Because cannabis is legal in many states but still illegal federally, growers are unable to ship their products to other countries or even other American states that have legalised the drug. So while US cannabis firms have driven product innovation and mastered large-scale growing operations, they are waiting restlessly for the export curtain to lift.
Instead, Canada has emerged as the dominant exporter in the burgeoning global cannabis trade, which ArcView Market Research and BDS Analytics estimated at US$14.9 billion (NZ$22.2b) in sales for 2019. Companies are raising capital and building international trade ties despite Canada’s unlikely climate to be an agricultural cannabis haven.
‘‘Canada has a huge advantage, because they can fill a gap,’’ said Rezwan Khan, vice-president of global corporate development for cannabis seed supplier DNA Genetics.
California growers have been developing legal cannabis products since 1996, longer than everywhere but Amsterdam.
Khan describes the state as ‘‘the epicentre of cannabis culture’’.
The genetics and sophistication underlying the US cannabis industry lead to betterquality and higher-potency flowers for those who consume the drug, and to innovations in oils, tinctures and edibles.
‘‘The world wants that technology,’’ said Michael Sassano, CEO of Solaris Farms, the largest cannabis hybrid greenhouse in Nevada. ‘‘The US is the one that turned the industry into what it is today, with all the products we make, not Canada.’’
The other draw of Americangrown cannabis, according to Denver-based cannabis law expert Bob Hoban, is that foreign customers value the regulatory oversight that ensures the product is safe and unadulterated. ‘‘It’s being regulated by a government agency, which is not necessarily what’s happening around the rest of the world.’’
The patchwork of legalisation means cannabis isn’t always grown where it’s easiest to grow, in warm climates with limited rainfall. Instead, it’s grown where it’s legal. California, Oregon and Colorado grow most of the country’s authorised crop as legally isolated islands.
When Canada legalised cannabis in 2018, its firms could be listed on the New York Stock Exchange and NASDAQ. So Canadian companies represent a back door for US firms to access capital and export markets – and for smaller firms, a potential exit strategy. Many US growers are positioning themselves as attractive acquisition targets for Canadian firms eyeing the US market.
Canadian firms are using their head start to sign trade deals and secure licences to sell cannabis internationally. While the market remains limited, at least 30 countries have legalised medicinal cannabis, and the numbers are growing as scientific studies have demonstrated its utility.
‘‘There’s more than enough time for American companies to catch up,’’ said Kris Krane, president of 4Front Ventures, which grows and sells cannabis in nine states. ‘‘But the longer that we wait, the longer we continue to maintain this unsustainable prohibition, the more difficult it’s going to be for American companies to catch up.’’
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