Immigration lawyer sees ‘potential chilling effect’ on investment; investor who was banned calls it ‘one of the worst experiences of my life’
Visiting the U.S. is a “crapshoot” that could lead to a lifetime ban for foreign nationals who are invested or work in the Canadian marijuana industry, which could hurt the booming sector, immigration lawyers said Friday.
Todd Owen — a senior officer with U.S. Customs and Border Protection, or CBP, overseeing border operations — told Politico in an interview published Thursday that border agents would still seek to permanently ban any foreign visitor who admits to working or investing in the cannabis industry, or admits to have taken the drug, even after recreational marijuana use becomes legal in Canada on Oct. 17.
MarketWatch confirmed that stance in an email exchange with a CBP spokeswoman, who said investors could face a permanent ban from entering the U.S.
“Although medical and recreational marijuana may be legal in some U.S. states and Canada, the sale, possession, production and distribution of marijuana or the facilitation of the aforementioned remain illegal under U.S. federal law,” spokeswoman Stephanie Malin said in a statement.
In a follow-up exchange, Malin confirmed that investing in publicly traded marijuana companies, including those traded legally on U.S. exchanges, is considered “facilitation” of illicit drug trade under CBP policy.
“That’s the first [time] I’ve actually heard them say a Canadian-only enterprise is an illegal enterprise for U.S. entry purposes,” said Scott Railton, a lawyer at Cascadia Cross-Border Law in Bellingham, Wash.
Railton explained that, once recreational marijuana is legal in Canada, a Canadian business that provides marijuana only within that country, not in the U.S., would not be involved in an illicit business.
“I really question how they can deny someone admissibility on the illegal-trafficking grounds when the industry is not illicit in a foreign country,” Railton said. “That’s a novel interpretation of that law that is an expansive one [and] that will require a judge to look at.”
Railton said he has advised Canadians who were interested in investing in Canadian pot companies and were concerned about their ability to travel to the U.S. and sees the potential for potential investors to avoid the sector because of the risk of a travel ban.
“There is a potential chilling effect on actual investment if the agency is taking that position,” Railton said. “It would have an impact. There are Canadian investors who would steer clear.”
Three Canadian pure-play marijuana companies are publicly listed on the major U.S. exchanges: Tilray Inc. TLRY, +1.52% , Canopy Growth Corp. CGC, +7.08% and Cronos Group Inc. CRON, +2.67% . Their share prices have posted rapid gains as Canadian legalization approaches.
There are many more Canadian pot companies listed in that country, such as Aurora Cannabis Inc. ACB, +2.89% and Valens GroWorks Corp. MYMSF, +18.58% , and they have also been hot investments. The Horizons Marijuana Life Sciences Index ETF HMMJ, +3.76% ,which tracks more than 20 cannabis companies in North America and trades on the Toronto Stock Exchange, has risen more than 14% this year, beating the U.S. benchmark S&P 500 index’s SPX, +0.03% 8.6% gain.
American citizens and dual citizens of the U.S. and Canada are free from risk, as the policy pertains only to citizens of other countries seeking to enter the U.S. For foreign nationals with investments in the cannabis business, however, visiting the border is a “crapshoot,” according to lawyer Terry Preshaw.
”Even though marijuana has been or is about to be legalized on both sides of the border here in Washington state, there is this thin line called the border where it is still a crime,” said Preshaw, who is licensed to practice law in both countries.
Lawyers who spoke with MarketWatch said guards at the border have the freedom to ask any questions they deem fit.
”They have really absolute power, in a nutshell,” Preshaw said.
“CBP officers are thoroughly trained on admissibility factors and the Immigration and Nationality Act, which broadly governs the admissibility of travelers into the United States,” the agency’s spokeswoman said in her official statement. “Determinations about admissibility and whether any regulatory or criminal enforcement is appropriate are made by a CBP officer based on the facts and circumstances known to the officer at the time.”
The question is how often foreign visitors are asked about their investments. Investors or workers who are prominently mentioned as such online could be more likely to be questioned about potential investments or employment in the cannabis industry, lawyers said.
“If that person fits a demographic that the officer thinks they might be a user or an investor and anything in between, the officer has the power to ask the right questions,” Preshaw added, while cautioning that “unless someone drops a clue and an astute border officer picks up on the clue, it doesn’t seem like a question that will be asked routinely.”
MarketWatch on Friday spoke with a Canadian citizen who was banned from visiting the U.S. after admitting to an investment in a company tangentially related to medicinal marijuana. The person requested not to be named in this report, but the story was confirmed by the person’s lawyer, who is not named in this article.
The person reported traveling across the border in April for lunch with an executive at a company in the U.S., and being stopped for additional questioning. Eventually, in an ordeal that, according to the person’s account, lasted six to seven hours and included car and phone inspections, being handcuffed and being accused of being a felon and a drug dealer, the person admitted that the company had a subsidiary that was studying medicinal marijuana, though that was not the core business in which the person had invested.
Still, the person was banned from the U.S. for life at the end of “one of the worst experiences of my life.”
“You’re interrogated, intimidated, banned for life, no information, no one to talk to, no resources to how to resolve it,” the person said.
Those who are banned can apply for a waiver to visit the U.S., but this person has no interest in doing so. “I really want nothing to do with the U.S., and I certainly don’t want to support the country in any way.”
That is not the only story of its kind. Vancouver venture capitalist Sam Znaimer told CTV News that he was quizzed about his investments when attempting to cross into the U.S. in May, and was hit with a lifetime ban after admitting to investments in U.S. cannabis companies. Znaimer, who did not respond to an email Friday, said in July that border guards did not ask about his personal consumption of the drug, only his investments.
“I believe that was because they wanted to send a message to Canadians that it has not only to do with your personal behavior, but whether in any way you have invested in these companies,” he told CTV.
In another case, workers, including the chief executive, at agricultural-equipment maker Keirton Inc. were hit with a lifetime ban in April after attempting to enter the U.S. to discuss designing equipment for cannabis production with an American company. The company had not yet even begun to design the machine, yet CEO Jay Evans told the Star that border guards explained that he and his colleagues were “drug traffickers” according to U.S. law.
Keirton officials declined to comment further, telling MarketWatch: “We have already stated the facts in a previous interview, and anything else would just be opinion.”
The immigration lawyers who spoke with MarketWatch cautioned that lying to the CBP about drug use or investments could still lead to a lifetime ban for misrepresentation. Preshaw said the best approach, if asked a question that could lead to a ban, is to turn right back around.
“Say this: ‘I respectfully request to withdraw my application at this time,’ ” she said. “Do it before you are refused and abort the trip; it’s not worth being refused entry for life.”
Recreational use of marijuana is now legal for adults 21 and older in all of the Pacific Coast states — Washington, Oregon and California — as well as Nevada, Colorado, Alaska, Vermont, Massachusetts, Maine and Washington, D.C. Dozens of other states permit medical marijuana.
