Published On: Thu, May 18th, 2017

Analysis: U.S. marijuana policy will make it NAFTA’s biggest loser as Canada and Mexico cash in

Luis Gómez Romero is Senior Lecturer in Human Rights, Constitutional Law and Legal Theory University of Wollongong

The president of the United States, Donald Trump, prides himself on his business acumen. But his protectionism may get America a truly bad deal when it comes to North America’s next big market: marijuana.

Fulfilling a campaign promise, on April 13 Canadian Prime Minister Justin Trudeau presented a bill to legalize cannabis for recreational uses (medical marijuana has been legal in the country since 2001).

Two weeks later, Mexico’s Congress followed suit, passing a bill to authorize cannabis use for medical and scientific purposes.

Two of three North American countries are now well positioned to unlock an industry that, according to Forbes magazine, was worth an estimated US$7.2 billion in 2016 and is projected to grow at a compound annual rate of 17%.

In the US, on the other hand, a protectionist administration has threatened to withdraw from the “terrible” North American Free Trade Agreement (NAFTA) and actively relaunched the US drug war. It looks like America’s businessman president may allow his country to miss out on the cannabis boom.

Prohibition is a commercial disaster

Medical marijuana research is a growth industry. Cannabinoids, a main (non-psychoactive) chemical component in marijuana, hold significant prospects for development in the pharmaceutical industry, as potentially does tetrahydrocannabinol (THC), the ingredient that makes users feel high.

Marijuana has been scientifically proven to soothe the effects of chemotherapy, treat glaucoma and ease some chronic pain. But many fields of inquiry remain untapped, thanks in large part to stringent US laws that classify cannabis as a Schedule I drug. That’s the most tightly restricted category, reserved for substances with “no currently accepted medical use.”

Pharmaceutical companies are keen to further disprove that thesis, knowing they will soon be able to patent cannabis-based medicines in both Mexico and Canada. Patients and doctors, too, have pleaded for restrictions on medical marijuana research in the US to be eased.

In the US, eight states and Washington, DC, have also legalized recreational marijuana. A total of 29 states plus the nation’s capital have legal medical cannabis.

But US Attorney General Jeff Sessions (who has declared that he “rejects the idea that America will be a better place if marijuana is sold in every corner store”) and Homeland Security chief John Kelly (who has erroneously called marijuana a “dangerous gateway drug“) consistently overlook this fact.

The Trump administration is determined to revamp prohibitionist policies. In a radical rollback of Barack Obama’s compassionate approach to nonviolent drug offenders, Sessions has actually ordered federal prosecutors to charge suspects of any drug-related crime with the “most serious, readily provable offence”, or whichever crime entails the harshest punishment.

This move will have well-documented implications for law enforcement. In 2015, marijuana arrests outweighed those made for all violent crimes combined, including murder and rape, 574,000 to 505,681, according to the NGO Human Rights Watch.

Now America’s drug war will have commercial consequences too. In the US, the National Institute on Drug Abuse has developed research mainly on the negative effects of cannabis, only marginally considering its potential medical uses.

Medical trials conducted on human beings require permission from several federal agencies, including the Department of Health and Human Services, the Food and Drug Administration, and, when it comes to illegal substances, the Drug Enforcement Agency. That makes getting clearance for cannabis trials unduly complicated.

The inconsistencies between federal and state legislation also discourage research because they do not offer a secure legal ground for patenting cannabis-based medicines. Potential investors in medical cannabis are forced to consider not only corporate competition but also criminal prosecution.

Likewise, because budding American cannabis producers struggle to access investment funding, the industry’s growth potential remains stunted.

Outsmarting Trump

If all of this sounds bad for American investors and patients, it’s good news for Mexico and Canada.

The Mexican medical marijuana bill championed by President Enrique Peña, who is not a bold politician, is quite limited. It emerged in response to the story of Grace, a profoundly epileptic eight-year-old girl for whom cannabis oil, illicitly administered by her desperate mother, proved a literal lifesaver.

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