Canadian cannabis investors should exercise caution when entering US

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While immigration law is clearly not an area in which we practice, at Zeifmans we are concerned for our clients and contacts active in the cannabis space in light of recent US border news involving Canadian cannabis investors. Accordingly, we decided to undertake some research to further assist those clients and contacts.

Len Saunders is a prominent immigration lawyer responsible for representing several Canadians who have recently received lifetime bans from entering the United States. In a spate of cases beginning last spring, Canadians seeking entry into the US have been questioned by border officials regarding a singular item: Their investment portfolios. Specifically, investment and any other related financial activity in the US Cannabis industry.

The Zeifmans team recently sat down with Mr. Saunders to discuss the risks Canadians face in doing business with the US Cannabis market.

Who is Len Saunders?
After completing his B.A. in British Columbia, Mr. Saunders studied law in California before being admitted to the Washington State Bar Association. Shortly after, he founded the immigration law firm where he has practiced for the last 20 years. As a Canadian, British, and Naturalized US citizen, he has both professional and personal knowledge of the challenges that exist for individuals navigating the complex US immigration system.

The state of Cannabis business in America
Although recreational Cannabis is legal in several US states, it is still considered a Schedule 1 Narcotic at the Federal Level. The US Customs and Border Protection (CBP) agency has released guidelines that clearly outline the risk posed to Canadians investing in American Cannabis companies:

“The sale, possession, production and distribution of marijuana or the facilitation of the aforementioned remain illegal under US Federal law. Consequently, crossing the border or arriving at a US port of entry in violation of this law may result in denied admission, seizure, fines, and apprehension.”[1]

Though the CBP has clarified that Canadians investing in Canadian Cannabis companies “will generally be admissible” to the US, Mr. Saunders recommends that all Canadians who are financially connected to the US cannabis industry, to act wisely and exercise caution when crossing the border.

Len Saunders’ advice for Canadian investors entering the US
As a global leader in Cannabis investment, and a trusted business advisor to many Canadian Cannabis companies, Zeifmans is committed to supporting our clients in understanding the best practices for interacting with the US Cannabis industry.

Len Saunders has provided a number of tips for Canadians who are investors or are financially connected to the US cannabis industry, seeking entry into the US:

1) Just don’t invest in American Cannabis
Sadly, Mr. Saunders says that the only certain way to avoid the risk of a lifetime ban from the US is to avoid investing in the US Cannabis industry altogether. This includes the provision of consulting services, and even owning property in the US that is leased to a Cannabis company. Overall, if you are receiving payment from a US citizen or US business in relation to any cannabis activity that is operating in the US, exercise caution.

2) Say nothing
If you do decide to invest in the US Cannabis market, and must enter the US, Mr. Saunders advises remaining tight lipped. Though you should never lie to border patrol agents, it is best to avoid the topic of Cannabis altogether.

3) Do not apply for an US E1 Investor Visa
For Canadian investors in US Cannabis stocks, the application will be automatically denied, and the individual will be banned for life for aiding and abetting. Even individuals applying through a Canadian consultant will be marked in the system.

4) Do not apply for a work permit
Thinking about working in the US at a Cannabis company as Canadian citizen? Think again. Your application for a work permit will similarly result in a lifetime ban, even if you are working at Canadian cannabis company with US operations.

5) Do not accept paid US speaking engagements
Professionals planning on giving a keynote at a Cannabis event in the US, and receiving payment for attending, should expect the possibility of receiving a lifetime ban as well.

6) Enter the US through a different airport than your destination
Visitors planning on attending a Cannabis-related conference in the United States should consider planning a layover at another destination first before arriving at the event. Recently, US border officials began heavily questioning the investments of Canadians travelling to Las Vegas in light of a Cannabis conference taking place there. As a result, a lifetime ban was issued[2] to one Canadian.

7) Send a colleague with dual citizenship instead
If you must attend a Cannabis-related event or are planning on doing any cannabis related business in the US,  Mr. Saunders advises sending a colleague with dual citizenship in your place instead. It is likely that they will not face the same scrutiny, as the US must allow in US citizens.

8) If you’re sent to secondary questioning, withdraw
If you are entering, flagged, and sent to secondary questioning, Mr. Saunders recommends stating, “I politely decline and revoke my entry”, and returning home. Though the incident will be marked, you will not receive a lifetime ban.

Next steps for a banned individual who wants to return to the US
Individuals who have received a lifetime ban can apply for temporary waivers. But it’s not a perfect process; the application costs US$585, plus any legal fees, and the process can take up to a year.

It is important to note, the cannabis industry is still a bit of the “wild west” – regulations are not always clear and US border guards are simply just following orders. Thus, if you’re a Canadian with a financial connection to American cannabis, or a Canadian cannabis investor intending to travel to the United States, be watchful. In addition, even if the American cannabis company has offices in Canada or vice versa, best practice is to avoid receiving financial payment from the US cannabis operating company directly.

If you have questions about how to best structure your cannabis business, contact a member of our cannabis team, Larry Zeifman, Robert Grunwald, Robert Benmergui, and Jennifer Chasson.

[1] U.S. Customs and Border Protection, “CBP statement on Canada’s legalization of Marijuana and crossing the border”, https://www.cbp.gov/newsroom/speeches-and-statements/cbp-statement-canadas-legalization-marijuana-and-crossing-border

[2] CTV News, “What Cannabis investors need to know about crossing the U.S. border”, https://www.ctvnews.ca/canada/what-canadian-cannabis-investors-need-to-know-about-crossing-the-u-s-border-1.4187437