WASHINGTON — More than three years after legal cannabis arrived in North America on a national scale, Congress is taking another stab at following Canada’s lead by ending long-standing federal prohibitions on marijuana in the United States.
A meeting today of the House of Representatives rules committee is expected to set the stage for debate Thursday and a vote as early as Friday on New York Rep. Jerry Nadler’s Marijuana Opportunity Reinvestment and Expungement Act.
Canada’s cannabis industry will be watching, albeit with low expectations.
If passed by both the House and the Senate and signed by President Joe Biden, the bill — known as the MORE Act — would help clear the way for the industry’s expansion by declassifying marijuana as a controlled substance.
It would also eliminate criminal penalties for possessing, cultivating or distributing pot, impose a new tax regime on production and imports, create a system to expunge convictions and make federal loans and services available to cannabis-based businesses.
It has a long way to go, particularly in the Senate, where Majority Leader Chuck Schumer, another New York Democrat, is likely to prioritize his own bill: the Cannabis Administration and Opportunity Act, expected in the upper chamber next month.
Industry observers have seen this movie before.
“I am skeptical as to whether the Senate is actually going to get on board with that particular legislative agenda, let’s put it that way,” said Jaclynn Pehota, executive director of the Association of Canadian Cannabis Retailers.
“I remain skeptical about how much of a priority this is, in a meaningful way, for people who are actually making policy agendas.”
Regardless of their chances, both bills have been shaped and informed by Canada’s experience with the legal-pot landscape, said David Culver, vice-president of global government relations for Canopy Growth Corp., based in Smiths Falls, Ont.
“They are aware of the Canadian model and the pluses and the minuses of the system, because I talk about it all day, every day,” said Culver, who routinely lobbies Capitol Hill for one of the largest players in Canada’s legal cannabis market.
Like smaller state-level markets throughout the U.S., the Canadian market has been a “crystal ball” of sorts for legislators, he said.
“We can see what’s worked and what hasn’t worked. Some of the lessons within these bills they’ve taken to heart, but others they haven’t.”
One significant problem is taxation, Culver noted: if excise taxes are too high out of the gate, the black market for cannabis will only continue to thrive. “You need look no further than Canada and California to understand that years after legalization, that illicit market is still the dominant force.”
The U.S. cannabis landscape is an ever-changing patchwork. The drug is legal for medical purposes in 39 states and for recreational use in 19, as well as D.C. But federal law still considers it a Schedule I controlled substance with high risk of abuse and no accepted medical use, alongside drugs like heroin, LSD and peyote.
That makes it impossible for companies operating in a legal landscape like California or Colorado to make use of institutional banking or financing services, access capital markets or do business outside their respective state lines. Nor can they write off routine business expenses, capital equipment or payroll costs.
If neither bill survives Congress, the Senate still has options, such as the SAFE Banking Act, which has already been passed by the House and would eliminate the federal barriers that deny cannabis businesses access to financial services and capital markets.
Eliminating those barriers “would be a real positive, from a Canadian perspective,” said Pehota.
“It would really accelerate and expand access to basic business services like banking and insurance, which remains very, very challenging for Canadian cannabis businesses to acquire because of the illegality of cannabis at the federal level in the United States.”
There’s another wrinkle, and that’s the White House.
While Biden promised during the 2020 election campaign to decriminalize cannabis and expunge convictions for non-violent offences, he’s been largely silent on the issue since taking office just over a year ago.
Indeed, Biden’s federal spending plan, out this week, was seen by some as openly hostile to legal pot. It included no provisions to allow D.C. to create a legal marketplace, and made no mention of protecting state-level cannabis markets, expanding research efforts or safeguarding benefits for veterans who use medical marijuana.
Legalization in the U.S. might be good for Canadian giants like Canopy and Tilray Inc., both of which are already making acquisitions and deals south of the border that are structured to set the table for a different legal landscape without getting offside with regulators.
But for smaller players, the prospect of a looming legal market that’s nearly 10 times the size of Canada could be a daunting one.
“The U.S. suddenly becomes both a threat and an opportunity,” said Michael Armstrong, a business professor at Brock University in St. Catharines, Ont., who watches the North American cannabis sector closely.
“Canadian companies who now have a couple of years of operating experience under a legal regime have learned how to mass produce. (U.S. legalization) would potentially be a big opportunity, a whole new market,” Armstrong said.
“However, it’s also a threat because right now, the Canadian industry doesn’t have to worry about American competitors.”
Unlike in Canada, social justice issues like ending criminal penalties and expunging non-violent cannabis offences are a central feature of the legalization effort. Nadler in particular is chairman of the powerful House Judiciary Committee.
For Culver, the criminal justice reform component of the effort is the most urgent aspect.
“The unintended consequences of inaction are severe,” he said.
“If we don’t act on cannabis reform sooner rather than later, we’re going to continue to arrest hundreds of thousands of people — this year, we’ll arrest over 300,000 people, again — unless reform is done.”
This report by The Canadian Press was first published March 30, 2022.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
