President Donald Trump told world leaders that America is open for business. But one budding U.S. industry — marijuana growers and sellers — sees irony in this boast, which comes as they feel forced by the administration to invest millions in cannabis businesses across the border.
Take Privateer Holdings, one of the biggest U.S. venture capitalist firms in the cannabis industry, and MedMen, a major operator of dispensaries and production facilities. They are leading a group of U.S.-based cannabis companies that, having raised hundreds of millions in cannabis funding, are looking to Canada and overseas where their financing and investment is out of reach of regulatory roadblocks and the Trump administration’s threatened crack down on legal marijuana sales.
“Our hope is that this sounds the alarm,” said Brendan Kennedy, CEO of Privateer Holdings. “The United States is falling behind the rest of the world. Jobs, capital, investment is flowing to other countries.”
Trump took his “America first” speech Friday to the crowd of global leaders at the World Economic Forum in Davos, Switzerland where he touted strong U.S. economic growth and tax cuts while pitching the United States as the ideal place for foreign business and investment. “Now is the perfect time to bring your business, your jobs, and your investments to the US,” Trump said.
Those in the cannabis industry, though, say the president’s sales pitch rings hollow.
“People would welcome that gesture, but there is nothing that is warm and fuzzy about his body language that would suggest that there is a green light and safe harbor to invest in marijuana,” said Matt Karnes of Greenwave Advisors, an industry financial firm. “His administration has made it clear there are still risks looming.”
The reason? U.S.-based cannabis leaders say it’s clear the Trump administration wasn’t thinking of the multi-billion dollar cannabis industry during Friday’s speech, which came just three weeks after Attorney General Jeff Sessions announced the administration would encourage enforcement of federal laws against marijuana use even in states that have legalized it.
Twenty-nine states and the District of Columbia allow the medical use of marijuana and eight states allow recreational use of the drug. Sessions’ announcement set off a wave of uncertainty in the growing industry and sent stock valuations plummeting before bouncing back the next day. The directive overturned an Obama-era policy that protected states that have legalized marijuana. The attorney general said federal prosecutors should have broader discretion to enforce laws against cannabis.
“The Justice Department is returning to the rule of law and returning local control to federal prosecutors, so they can evaluate the public safety threats to their districts and how to pursue marijuana-related prosecutions as they relate to the Department’s mission of reducing violent crime, fighting criminal organizations, and stemming the tide of the nation's drug crisis,” a U.S. Department of Justice official told McClatchy.
Privateer, which has the backing of the Silicon Valley mogul and Trump supporter Peter Thiel, announced Thursday that it had raised more than $100 million in its third round of fundraising. Kennedy said those dollars, which brings their total funding to $200 million, shows that U.S. investors continue to see growth opportunities despite the federal government’s threats to clamp down. But Kennedy said more than 75 percent of the funding would be invested in Canada and overseas where governments are more supportive of the industry.
“That money would have gone to jobs and would have gone to pay taxes in the U.S. It would have gone to manufacturing facilities in the U.S.,” Kennedy said.
MedMen, the California-based cannabis company, announced plans this week that it would go public later this year, but in Canada.
Daniel Yi, a spokesman for MedMen, said steps taken by the Trump administration created a lot of “noise” but that investors have a long-view approach that it’s only a matter of time before cannabis is completely legal. He said MedMen would remain a U.S. company, but that it was moving financing to Canada because of legal and regulatory road blocks.
“The only reason we’re going to the Canadian securities exchange to raise capital is because you cannot as a marijuana company raise capital on the new York Stock Exchange or Nasdaq,” said Daniel Yi of MedMen.
Public support for the legalization of marijuana is at record highs, with 64 percent saying they believe it should be legal in an October Gallup poll.
The Trump administration’s actions also seem inconsistent with comments that Trump made during his presidential campaign. As a candidate, he said pot should be “up to the states.”
But White House spokeswoman Sarah Sanders said after Sessions’ announcement that Trump’s top priority was enforcing federal law “whether it’s marijuana or immigration.”