Canna Law Blog
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The cannabis industry has always been international. Our first cannabis client was actually a Dutch company that hired us years before either Colorado or Washington had legalized. This client hired us to figure out what it would need to do as a foreign company investing in a U.S. cannabis business in a cannabis industry which this company was certain would eventually be legal. That client was unique for years, but nowadays, many more of our cannabis clients come from outside the United States. So far, they are mostly coming from Canada, the Netherlands, Australia, Germany, and Israel, with a smattering of clients from elsewhere in Europe, Latin America and Asia.

Foreign investment in the cannabis industry. It’s complicated.

The foreign companies that contact us generally split fairly evenly between those seeking to get involved with ancillary companies and those seeking to get involved in the growing, processing or selling of cannabis. Invariably, they most want to know whether foreigners can invest in the U.S. cannabis industry and, if so, at what risk?

The short answer is a qualified yes for ancillary businesses and a qualified maybe for businesses directly involved with the plant. The immigration issues faced by foreign investors is just one of the many issues they face when investing into the US cannabis industry. But because we have been dealing with this issue frequently of late, we use it to illustrate how foreign involvement in US cannabis can be tricky.

U.S. Citizenship and Immigration Services maintains broad authority to limit entry of foreigners into the United States. This includes the authority to bar entry (or deport) a foreign citizen who has committed a crime, including a mere misdemeanor. Since any business activity involving marijuana remains illegal under federal law, a foreigner doing business with a cannabis company – even one operating completely legally in a state with the robust regulations required by the Cole Memo – is technically committing a crime and therefore may be deported. The Cole Memo dictates federal enforcement policy by prioritizing prosecutorial discretion; it does not create a legal defense for marijuana related crimes, even in states with legal cannabis, and it therefore offers no help to a foreign citizen in a deportation proceeding. Marijuana related activity (including involvement with state-legal marijuana) can also constitute “moral turpitude” in the eyes of immigration authorities and this designation can bar entry into the U.S. and prevent any chance of gaining U.S. citizenship.

Immigration authorities have the power to deport foreigners without having to comply with many of the legal safeguards to which U.S. citizens are entitled. For example, when immigration authorities are determining whether to deport someone for alleged criminal activity, the mere admission of the crime can often be enough to warrant summary deportation, even absent a formal conviction. This means a foreigner can be deported without ever being able to tell his or her side of the story, to explain the extenuating circumstances, or to make any other argument before a judge as to why deportation is unwarranted.

Though we are not aware of any foreign investor being deported for investing in a business that provides ancillary services or products to the cannabis industry, it is always possible that a zealous prosecutor or the USCIS will seek deportation by asserting that even ancillary businesses violate U.S. law by acting as an accessory to businesses that violate the Federal Controlled Substances Act. The deportation risks are greater for foreign investors who put their money into businesses that grow, process or sell cannabis.

Foreign investors must also always be mindful of the laws in their own country as well. And again, though we are not aware of any such prosecution, it is possible that some countries will prosecute their own citizens for having gotten involved in the cannabis industry of another country.

2 responses to “Foreign Investors in the U.S. Cannabis Industry Face Their Own Special Risks”

  1. This interpretation certainly has merit. However, the “money” is simply too much for the FED’s and the state’s to turn their backs on. Destiny and greed will result in both parties embracing cannabis in all its facets. As Mick Jagger put it so eloquently, “Time is on our side.”

  2. This article cosigns another article I read this morning about investing in cannabis in Canada. I didn’t save it because I thought it was far fetched. It stated that,if companies or investors, invest and make money off of Canadian cannabis can be charged with money laundering when they transfer the money back. Only because cannabis is federally illegal. Which from my basic understanding, would make it illegal “technically” on the US stock market. If it’s illegal federally, why should it matter what market you invest in if they can charge you for investing in any one of them for now it looks like different charges in each market.
    Like I said, it’s just my “average Joe” understanding or interpretation of what the laws are currently written as. If I’m wrong, please someone explain so I will not get this wrong.

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The Canna Law Blog™ is a forum for discussion about the practical aspects of cannabis law and how it impacts those involved in this growing industry. We will provide insight into how canna businesspeople can use the law to their advantage…

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Please be mindful that possessing, using, distributing and selling marijuana are all federal crimes and that this blog is not intended to give you any legal advice, much less lead you to believe that marijuana is legal under federal law.