Could Legal California Pot Send Canadian Profits Up in Smoke?

Small marijuana plants, available for sale, are shown in a medical marijuana dispensary in Oakland, California June 30, 2010. (Photo by Robert Galbraith, Reuters)Small marijuana plants, available for sale, are shown in a medical marijuana dispensary in Oakland, California June 30, 2010. (Photo by Robert Galbraith, Reuters)A looming referendum in California on whether to legalize marijuana has fuelled a debate among bloggers and pundits over this question: Could legalization in the United States cripple the Canadian economy?

In a column on the Guardian’s website this week, B.C. writer Douglas Haddow writes that a move to legalization would be “devastating to the Canadian economy, halting the flow of billions of dollars from the U.S. into Canada.”

B.C. marijuana activist Marc Emery — the self-styled “Prince of Pot” who is awaiting sentencing in the U.S. for distributing cannabis seeds — recently told a Vancouver indie website that “the homegrown market will evaporate.”

Are they just blowing smoke? Not necessarily, some academics say.

Marijuana production generates at least $3 to $4 billion in B.C. alone — due, in large part, to heavy demand from pot heads south of the border, said Darryl Plecas a criminology professor at the University of the Fraser Valley in Abbotsford, B.C.

Plecas said he estimates that about 70 per cent of all marijuana produced in B.C. is sent to the U.S. and much of it goes to California.

“(Producers) are probably frantically looking where they can ship it to” besides California, he said.

Eugene Oscapella, a criminology lecturer at the University of Ottawa and founding member of the Canadian Foundation for Drug Policy, said there is no doubt that if California legalizes marijuana, producers there will be able to sell the product more cheaply — thus making it difficult for producers here to compete and driving some out of business.

“Increased availability for a lesser price in that country will have an effect on suppliers in Canada,” he said.

Of particular concern, he said, are the mom-and-pop producers in rural parts of B.C. who turned to marijuana as a way to make ends meet after the forest industry declined.

Other observers, however, are more circumspect about how crippling legalization would be for Canadian producers, pointing out that “B.C. Bud” still enjoys a reputation in many circles as “the Rolls-Royce” of marijuana and that there are many other U.S. states — besides California — that covet Canadian-grown marijuana.

Also, Mexico, which exports far more pot to California than Canada, would probably be stung a lot harder, they say.

Even as the Canadian dollar has appreciated — making Canadian-grown marijuana much more expensive for Americans to buy — the industry has continued to thrive, said Stephen Easton, a professor of economics at Simon Fraser University in B.C. and a senior fellow at the Fraser Institute.

“It’s a very resilient industry and very adaptive,” he said.

Chuck Doucette, a retired RCMP staff sergeant who specialized in drug enforcement, adds the black-market exchange of Canadian marijuana for U.S. cash and cocaine is so “thoroughly entrenched” that it is unlikely that those lines will disappear overnight.

The California marijuana initiative is headed to a vote in November. Even if it passes, it is likely that it will go through a series of court challenges, experts say.

An Angus Reid poll earlier this year showed that 53 per cent of Canadians favour legalizing marijuana — regulating and taxing it like alcohol and tobacco.

Supporters say they hope passage of the initiative in California will create a domino effect that leads to more lax pot laws in other parts of the U.S. and in Canada.

In addition to raising huge amounts of tax revenue, legalization would severely undercut organized crime groups and free up police resources to tackle more serious crimes, they say.

Marijuana and cocaine are consistently reported to be the illicit drugs most frequently trafficked by organized crime groups, according to annual RCMP reports assessing the drug situation in Canada.

But opponents of legalization say widespread use of marijuana could lead to use of more dangerous drugs, worsen addiction problems and send mixed messages to young people about drug use.

Prime Minister Stephen Harper’s Conservative government has repeatedly said it has no intention of decriminalizing or legalizing marijuana.

– Article from The Vancouver Sun.