Legalized pot creates tension at Michigan-Canada borders

Dec 18, 2018

Investors are smelling the profit potential in legal marijuana.

And the latest fertile field for financiers is Michigan, the 10th U-S state to legalize pot for recreational use, and the only one in the Midwest

Michigan also shares a border with Canada, where pot was legalized in October.

But as Quinn Klinefelter reports, anyone in the cannabis industry trying to cross that border could see their right to enter the US go up in smoke.

The US Transportation Department says more than a quarter of all the trade between the US and Canada crosses here, through the Detroit-Windsor Tunnel and the nearby Ambassador Bridge.

But Customs Officer Agron Martini says some travelers may not make it through if there’s even a whiff that their trip involves marijuana.

“Anytime somebody plans on entering the United States to involve themselves in the distribution, proliferation, possession of any form of marijuana, that could lead to them being found inadmissible.”

Even traveling just to discuss doing business with the US pot industry can be considered illegal drug trafficking.

About a month ago, Canadian cannabis consultant Rod Elliot says he and roughly two-dozen others were detained before they could board a flight to a marijuana business conference in Las Vegas.

“We were able to get through the next morning. There were people who were traveling to that conference who told the border agents that they were investors in the US cannabis industry.  And those people were given a lifetime ban.”

So, Elliot says he and some of his colleagues will simply avoid taking business trips to the US.

“I have been told by people in the industry that I will not travel to the United States if there is even the mere possibility that I will face a lifetime ban because I work in the legal Canadian cannabis industry.”

Michigan’s budding cannabis market, next door to Canada, is drawing significant investment interest.

But Detroit Medical marijuana dispensary owner Stuart Carter says the numerous investors knocking at his door – are all based in the US.

“And there are two-to-three hundred million dollars in investment money looking to find homes in Michigan.”

Carter says he’s turning down investors, preferring to put his own money in the Utopia Gardens dispensary.

Yet he says licensed dispensaries in Michigan do face a big problem – a shortage of marijuana.

The state used to allow caregivers for medical marijuana patients to sell any excess pot to dispensaries.

But Carter says the state now mandates that dispensaries buy only from licensed marijuana growers.

And he says they have not grown enough pot yet to supply dispensaries.  

“The state had to extend a deadline that allowed dispensaries to buy from caregivers because there was literally no product available for us to sell.”

By the start of next year caregivers will be required to sell their product only to growers, who will then sell it to dispensaries until the growers can produce enough pot of their own to sell.

Carter says that could take six months or more, with the roughly three dozen licensed dispensaries in Michigan taking a big financial hit.

He says growers are asking more than double the price caregivers used to charge, with no real end in sight.

“The growers will not have product. There will probably by June of next year be three times as many dispensaries as today. So how are they gonna have the productivity to supply a hundred?  It’s a ridiculous middleman gouge.”

He estimates there’s also about a hundred un-licensed dispensaries, which can buy their pot on the black market if necessary, and take customers away from the shops that are following the state’s rules.

With marijuana legal in both Canada and Michigan now, there’s likely no shortage of pot on the street.

Carter says Canadians in the cannabis business potentially being banned from crossing the border will not affect his dispensary.

But even so, marijuana remains criminalized under US federal law, and Carter says he takes no chances at a Customs toll booth.

“I don’t even take my business card because I’m not interested in being scrutinized by the Border Patrol.”

With Michigan’s cannabis industry still flowering, those involved in it don’t want to burn any future bridges, especially those that cross the border.