Recently, President Joe Biden announced a plan to pardon those convicted of simple cannabis possession, which left many wondering if this could be the first step towards full legalization or the federal declassification of cannabis. Though nothing official has been announced, there are many in the legal cannabis industry that wonder whether the U.S. will go the same route as Canada, who fully legalized in 2018.
Shimmy Posen, a Canadian attorney and partner at Garfinkle Biderman LLP with over a decade of experience working with cannabis corporate finance, mergers, and acquisitions, believes that this will eventually lead to the U.S. legalizing cannabis, much like Canada did in 2018. He said it is inevitable due to the global market and how much capital the cannabis industry can generate in international markets. “Being at the forefront of all this, my desk has become a trading floor for certain peripheral elements of these deals. I felt like a sports agent at times,” Posen said. “It got to be very complex, because there were lots of intricacies of how much growers could own, whether they would allow franchising or not and so much more that had to be ironed out. It was very knowledge-centric.”
Posen said he has worked with several Israeli and American companies that went public but is interested in countries where cannabis sales are legal. “Anywhere in the world really, where cannabis was touching capital markets, we were aware of it at my desk, and advising clients and helping them build businesses. Some of the more recent deals include the High Tide acquisition.”
Posen said that in the global marketplace of cannabis, Canada stands out due to its legal status. “What distinguishes Canada from the rest of the world is this government truly allowed cannabis into the capital markets to interact with the financial systems,” he said. “But, in countries like the U.S. they still have issues with cannabis in banking systems due to the federal legality issues. We don’t have that problem in Canada since the illegality was removed.”
Posen said that he thinks Canada is a global leader, but admits the system isn’t perfect and has its flaws that need to be worked out. “One thing Canada got wrong, is they lumped under one umbrella THC and CBD,” Posen said. “Lots of people have issues coming into Canada on flights with CBD products, especially from the U.S., because they don’t think it’s a problem. But CBD is a controlled substance in Canada; you can’t buy it over the counter at a gas station or pharmacies, you can only get it at licensed dealers since it’s regulated and controlled. People fly in and get in trouble quite often because they don’t know this.”
Another problem Canada faced, according to Posen, is that once cannabis was legalized in 2018, for a period of around a year, only flower [was] allowed to be sold.” It took about a year for other products such as vapes, concentrates, and edibles to be available legally, so there was a market for all these products in the ‘black market,’” Posen said. “I don’t call them ‘black market’ though; I refer to them as the legacy market. Now, consumers can buy all these products in the legal retail stores. But it was a big mess. Canada has certainly taken a bullet for the rest of the world to see how this could work for totally legal cannabis But, many of the legacy market underground stores are starting to transition into the legal markets because that is the future. No one goes out to buy moonshine; they buy known brands of hard liquor. Same [idea] with cannabis. This just takes time, it’s a process.”
Posen said that he thinks the cannabis sector in the global financial marketplace will continue to grow exponentially and even skyrocket. “The projectiles are clear. The industry is such a behemoth today and it’s only going to grow. It’s global already, and that’s without full legalization from countries like Germany and the U.S., so you can imagine what will happen when those countries fully allow legal cannabis,” he said. “One leading country especially for medicinal cannabis is Israel, who really started the industry standard for medical cannabis.”
Posen said he is keeping an eye out for countries like Mexico, Thailand, Germany, and the U.S., among others but thinks eventually, most countries will allow legal, regulated cannabis sales.
He thinks the recent announcement by Biden regarding cannabis convictions to be a first good step. “I suspect that eventually, the federal illegality will be removed, or the U.S. will just let the states determine what they want, kind of like how it went down during prohibition—just let local jurisdictions determine what they want to do.”
Although reluctant to offer a date or timeline, Posen said he believes that legalization is coming to the U.S. “As soon as it happens, it will remove many of the obstacles the U.S. faces in the public capital markets. Also, many other countries will follow immediately and also legalize because many countries only have it illegal because of the U.S.,” Posen said. “People want individuals to make their own decisions, but at the same time not promote it for children. It’s about freedom but responsible use. The sky’s the limit.”
For more information, or to contact Mr. Posen, please visit the Garfinkle Biderman page.