(AP Photo/Ted S. Warren, File)An ATM sits next to a rack of marijuana clone plants that are used to grow medical marijuana at The Joint, a medical marijuana dispensary in Seattle.
TORONTO/ST. LOUIS (Reuters) – U.S. investors in Canada’s medical marijuana industry are betting they won’t fall under the scrutiny of U.S. law enforcement officers – but it’s a risky bet.
With marijuana still illegal on a federal level in the United States, American investors in Canadian medical marijuana can be seen as violating the Controlled Substances Act, according to some U.S experts. And the use of the banking system to transfer the proceeds of such investments could be seen as money laundering.
The U.S. Drug Enforcement Agency has already been tracking investments made in state-sanctioned marijuana business in the United States. When asked by Reuters about the DEA’s view of U.S. investments in Canadian marijuana, DEA spokesman Rusty Payne said the agency is “most interested in those types of activities.”
U.S. investors have been increasingly drawn to the raft of public listings by producers that has sprung up since Canada overhauled its laws this year, making it legal to buy marijuana from licensed producers with a doctor’s prescription.
Canada’s medical marijuana market, which is expected to grow more than tenfold, to C$1.3 billion, in a decade, has matured more rapidly than its peers. While U.S. investors have several European markets where medical marijuana is legal on their radar – Canada has been the biggest beneficiary of fund flows from U.S. investors.
“We really like the Canada model, which is really unlike any other in the world,” said Christian Groh, a co-founder of Seattle-based private equity firm Privateer Holdings, one of the largest players in the medical marijuana sector. “What we’re doing here does not violate local, state and federal law (in Canada).”
Privateer created a Canadian …read more