Q&A on Foreign Investment in Cannabis with Partner, Jenny Gumer

March 15, 2021

Jennifer Gumer Partner Headshot

Welcome to our Q&A with partner, Jennifer Gumer!

As a partner at CGL and our Regulatory and Compliance Practice Lead, Jennifer provides strategic counseling, practical advice, and expert advocacy to clients with production needs. As an Adjunct Professor of Law and Bioethics, she is uniquely qualified to handle all interactions with federal, state, and local regulators who oversee product development, manufacturing, and marketing activities, including the FDA and Local Hemp Regulators

Q1: In 2018, a Canadian cannabis investor was banned from entering the US for life when he flew into Vegas for a cannabis conference. Can this still happen today – and what other risks do foreign investors in cannabis face? 

While I want to point out that CGL is not an immigration firm and does not provide immigration advice, I can say that yes this could still happen today.  

Marihuana remains a Schedule I substance under the federal Controlled Substances Act, alongside MDMA, PCP, and heroin. While this remains the case, front-line border officers may refuse entry to foreign residents who invest in cannabis. Cannabis use may also impact a person’s ability to become a US citizen. A Department of Homeland Security policy outlines that marijuana use can be ‘a conditional bar to establishing good moral character (GMC) for naturalization even where that conduct would not be an offense under state law.’ 

Beyond the potential immigration implications, foreign cannabis investors must grapple with the pitfalls all cannabis investors face:  

  • Investors should be aware of the rigorous ownership disclosure laws that require individuals to be named as owners on public registers. These regulations do not allow for companies to be listed as owners, they require disclosure at the individual level. Some states require disclosure from financial interest holders, who hold small equity interests or less significant investments, loans, or profit-sharing arrangements in cannabis companies.  
  • Investors should also be aware of the tax implications of investing in cannabis, particularly since cannabis companies are not eligible for many deductions you’d typically expect (courtesy of the federal illegality).  
  • Constant reporting obligations, strict licensing laws, industry uncertainty, and problematic banking arrangements are further pitfalls investors (including foreign investors) should be aware of.  

Disclaimer

The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website or any of the e-mail links contained within the site do not create an attorney-client relationship between CGL and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

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