CANADIAN MARIJUANA PROFITS COULD GO UP IN SMOKE SOON

Referendum on Legalization Is on the Way

A looming referendum in California on whether to legalize marijuana
has fuelled a debate among bloggers and pundits over this question:
Could legalization in the United States cripple the Canadian economy?

In a column on the Guardian's website this week, B.C. writer Douglas
Haddow writes that a move to legalization would be "devastating to
the Canadian economy, halting the flow of billions of dollars from
the U.S. into Canada."

B.C. marijuana activist Marc Emery -- the self-styled "Prince of Pot"
who is awaiting sentencing in the U.S. for distributing cannabis
seeds -- recently told a Vancouver indie website that "the homegrown
market will evaporate."

Are they just blowing smoke? Not necessarily, some academics say.

Marijuana production generates at least $3 billion to $4 billion in
B.C. alone -- due, in large part, to heavy demand from pot heads
south of the border, said Darryl Plecas, a criminology professor at
the University of the Fraser Valley in Abbotsford.

Plecas said he estimates that about 70 per cent of all marijuana
produced in B.C. is sent to the U.S. and much of it goes to California.

"[Producers] are probably frantically looking where they can ship it
to" besides California, he said.

Eugene Oscapella, criminology lecturer at the University of Ottawa
and founding member of the Canadian Foundation for Drug Policy, said
there is no doubt that if California legalizes marijuana, producers
there will be able to sell the product more cheaply -- thus making it
difficult for producers here to compete and driving some out of business.

"Increased availability for a lesser price in that country will have
an effect on suppliers in Canada," Oscapella said.

Of particular concern, he said, are the mom-and-pop producers in
rural parts of B.C. who turned to marijuana as a way to make ends
meet after the forest industry declined.

Other observers, however, are more circumspect about how crippling
legalization would be for Canadian producers, pointing out that "B.
C. Bud" still enjoys a reputation in many circles as "the
Rolls-Royce" of marijuana and that there are many other U.S. states
- -- besides California -- that covet Canadian-grown marijuana.

In addition, Mexico, which exports far more pot to California than
Canada, would probably be stung a lot harder, they say.

Even as the Canadian dollar has appreciated -- making Canadian-grown
marijuana much more expensive for Americans to buy -- the industry
has continued to thrive, said Stephen Easton, a professor of
economics at Simon Fraser University and a senior fellow at the
Fraser Institute.

"It's a very resilient industry and very adaptive," Easton said.

Chuck Doucette, a retired RCMP staff-sergeant who specialized in drug
enforcement, adds the black-market exchange of Canadian marijuana for
U.S. cash and cocaine is so "thoroughly entrenched" that it is
unlikely that those lines will disappear overnight.

The California marijuana initiative is headed to a vote in November.
Even if it passes, it is likely that it will go through a series of
court challenges, experts say.

An Angus Reid poll earlier this year showed that 53 per cent of
Canadians favour legalizing marijuana -- regulating and taxing it
like alcohol and tobacco.

Supporters say they hope passage of the initiative in California will
create a domino effect that leads to more lax pot laws in other parts
of the U.S. and in Canada.

In addition to raising huge amounts of tax revenue, legalization
would severely undercut organized-crime groups and free up police
resources to tackle more serious crimes, they say.

Marijuana and cocaine are consistently reported to be the illicit
drugs most frequently trafficked by organized-crime groups, according
to annual RCMP reports assessing the drug situation in Canada.

But opponents of legalization say widespread use of marijuana could
lead to use of more dangerous drugs, worsen addiction problems and
send mixed messages to young people.

Prime Minister Stephen Harper's Conservative government has
repeatedly said it has no intention of decriminalizing or legalizing marijuana.