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Will Canada Become Pot Tourism Destination? Don't Count on It, Eh

Despite incoming Canadian Prime Minister Justin Trudeau’s vow to legalize recreational pot “right away,” it will be a long time before sales begin.

Despite incoming Canadian Prime Minister Justin Trudeau’s vow to legalize recreational marijuana “right away,” travelers thinking of heading north to get high are in for a buzz kill.

While Trudeau’s plans to legalize pot have sparked a gold-rush mentality among pot proponents and enthusiasts, regulations and tax rules are likely years away, experts say. Even then, it’s not clear whether legality will lead to a significant marijuana tourism industry, given the onward march of legalization efforts in the U.S.

The government has yet to announce any details regarding regulation, taxation or method of distribution since last week’s national election, which ushered in a Liberal Party majority led by Trudeau. But that hasn’t dampened the enthusiasm of would-be cannabis kingpins.

“Since legalization has become a possibility, our phones have been ringing off the hook,” said Michael Mayes, CEO of Quantum9, a Chicago-based marijuana consulting company. “Entrepreneurs, venture capitalists, private-equity firms have all been reaching out to us.”

Currently, marijuana in Canada is only legal for medical use in a tightly controlled system overseen by Health Canada. Recreational use could fall under similar federal regulation, although many observers believe it will more likely be managed by individual provinces, as alcohol is today.

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The incentives to move quickly are there, says Bruce Linton, CEO of Canopy Growth Corp., which provides medical marijuana under the Tweed and Bedrocan brands. For one thing, the existing medical-marijuana system provides guidelines on security, labeling and other issues, all of which could provide a framework for implementation of regulations for recreational use.

Then there’s the potential revenue: The recreational market is potentially huge, estimated at up to $5 billion Canadian ($3.77 billion U.S.) annually by analyst Aaron Salz of Dundee Capital Markets. If fully realized, that means huge tax revenues as well.

“I think they’ll announce something before the year is out and begin working to have a system in place by the next election four years from now,” said Linton. “There’ll be a process of which provinces come on-stream, getting it right and, by the next election, pointing to the good news about all the taxes that have been collected.”

Most observers, though, don’t see pot tourism playing a significant role in the process. If or when recreational pot becomes legal north of the border, Canada-bound travelers will need a passport to enter the country, a potential barrier for those who can more easily travel to Colorado, Washington, Alaska and, as of Oct. 1, Oregon, the latest state in the U.S. to legalize recreational weed for those over 21.

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More to the point, perhaps, even domestic pot tourism remains a small-scale affair. Anecdotally, both Colorado and Washington reported significant retail sales to out-of-state buyers upon legalization but neither state tracks buyers’ residential status and pot tours and weed-friendly accommodations, aka “bud & breakfasts,” remain a niche market.

“Anecdotally, we hear about people coming here but I wouldn’t call it tourism,” said Brian Smith, spokesman for the Washington State Liquor and Cannabis Board. “It’s not something the state tracks or is trying to encourage.”

In fact, it’s the rapidly expanding array of other jurisdictions that will likely legalize pot that will probably provide the biggest buzz kill for pot tourism — in Canada and elsewhere.

“It’s like Amsterdam; for 40 years, it was the center of the world for weed users,” said Hugo St.-Onge, spokesman for Bloc Pot, a Montreal-based political party that advocates for an even-more liberal “non-intervention” approach, including the right to grow your own pot and sell it in small quantities, than Trudeau and the Liberals. “In 10 years, so many states will change their laws (about marijuana) that people won’t need to travel to get it.”