With the impending legalization of recreational marijuana this fall, Canadians with investments in American pot companies will have to be careful crossing the U.S. border following the news that one prominent businessman was banned for life.
Sam Znaimer is a prominent venture capitalist in Vancouver who started investing in budding U.S. cannabis startup companies a few years ago.
In May, Znaimer was trying to travel to the States when he was stopped by border officials. During the questioning, he said he was never asked about his personal consumption of the drug, which is legal in several U.S. states, but not federally. Instead, Znaimer said Homeland Security interrogated him about his investments.
“In the course of four hours, they never did ask [about pot consumption] and I believe that was because they wanted to send a message to Canadians that it has not only to do with your personal behaviour, but whether in any way you have invested in these companies,” he told CTV Vancouver on Thursday.
Even though recreational marijuana is legal in certain states, possession of the drug is still a criminal offence under U.S. federal law. This means that border officers have the ability to question Canadians crossing the border about any past cannabis use. Canadians who admit to consuming marijuana at some point in their lives can face serious consequences, such as a lifetime ban on entering the U.S.
Even though Znaimer didn’t admit to personally using pot, he was given a lifetime ban anyway because of his investments in U.S. marijuana companies, he said.
“I was truly shocked by what happened to me,” Znaimer exclaimed.
Znaimer is hardly alone. A pot industry executive contacted by CTV News said he lost his NEXUS Trusted Traveller card because he was headed to an industry meeting in the U.S. Another entrepreneur was reportedly denied entry and banned for life for running a company that makes equipment that helps harvest marijuana.
Problems at the border could impact thousands of Canadian investors who have put an estimated $25 billion to $30 billion into Canada's biggest pot production companies.
Federal officials have been in touch with their U.S. counterparts about the border issues before legal cannabis hits the market on Oct. 17.
Immigration Minister Ahmed Hussen said Canadian travellers questioned at the U.S. border should be honest and fully understand the American policy on cannabis.
“They have their own rules and views with respect to cannabis, and I would encourage Canadians to respect those rules as they go into the United States," Hussen said Friday in Winnipeg.
U.S. immigration lawyer Len Saunders explained that Znaimer’s case is not unique. The Washington-based lawyer said he’s seen a growing number of Canadian businesspeople denied entry and even banned from investing in U.S. companies.
“Some people are caught off guard,” Saunders said. “They think it’s legal in Washington state, which it is. It’s going to be legal in Canada, so what’s the big deal? Why not admit to the officer at the border that you’ve invested in a cannabis company in California?”
Saunders said U.S. Homeland Security’s definition of “business” in the country can be quite broad and can include mutual funds or any other investment plans.
In one case, Saunders said an Edmonton man received a lifetime ban from entering the U.S. simply because he was a part-owner in a Colorado building that leases space to a pot dispensary.
What to do if you’re banned:
For those Canadians who are banned from the States for their cannabis use or business dealings, there’s little recourse. Saunders said they can apply for temporary waivers that will permit them to cross the border for up to five years.
The process for applying for a waiver can be cumbersome and costly, however. The application requires a lot of paperwork and can take up to a year to process. It also costs US$585, according to the U.S. Customs and Border Protection website.
Unfortunately, Saunders wasn’t able to offer a better alternative for Canadians.
“Either stop travelling to the U.S. or get out of the business,” he said.
As for Canadians with investments in pot companies at home, Saunders said it doesn’t appear that will cause them any trouble at the U.S. border.
With a report from CTV Vancouver's Penny Daflos