The results of the 2020 election in the United States touched off a wave of enthusiasm among Canadian cannabis companies looking to cash in on business opportunities south of the border.

With the Democrats retaining their majority in the House of Representatives while picking up control of the Senate and the White House, it appeared to casual observers that full federal legalization could be just around the corner. This is still possible, but it is by no means certain.

Fortunately, there are plenty of opportunities within the legal hemp-derived CBD space for companies looking to expand their presence south of the border.

Should federal legalization pass in the U.S., sales could boom not only because of broader demand, but because American companies are prepared for this eventuality.

Cannabis industry optimism in the United States is mounting alongside increasing expectations for national legalization.

Skeptics, however, point to the Canadian experience and suggest we temper our enthusiasm. To be sure, years removed from 2018 legalization, most marijuana producers in Canada are still reporting losses.

Cannabis has substantial potential in Canada, but it has been a bumpy ride so far. At first, producers were not prepared with enough supply to meet demand. There was a substantial backlog in orders, and producers were not sure what products or strains would be popular and where.

More research is needed to determine if a new study exploring how cannabis legalization influences illegal drug markets is correct in finding that prices for weed falls but those for hard drugs rises.

“Our exploratory findings suggest that markets for illegal drugs may not be independent of legal cannabis market regulation,” lead author Angélica Meinhofer, an assistant professor of population health sciences at Weill Cornell Medicine, notes in a statement from the Society for the Study of Addiction.

Many of the Canadian cannabis companies are focused on expanding into the US cannabis market in 2021. The one remaining obstacle is that if they grow cannabis or own retail stores in Canada, they are prohibited from entering the US market until cannabis is legal at the federal level.

Without federal legalization and safe banking in the US market, however, navigating through the hurdles of the cannabis space is limited and can add many extra costs to a company’s capital structure.

Marijuana legalization in the U.S. could be years away from becoming a reality. However, that isn't stopping Canadian cannabis businesses from staking out positions beforehand. They want to be ready to go when the market opens up, and that is why there has been an uptick on the mergers and acquisitions (M&A) front of late.

Last week, Valens (OTC:VLNCF) became the latest name to announce its entry into the U.S. market with the acquisition of Green Roads, a U.S. company that makes hemp-derived cannabidiol (CBD) products. Let's take a closer look at what it means for Valens, and for the industry in the U.S.

The inherent contradictions of American cannabis laws seem to appear in the news almost every week.

At the state level, for example, Virginia recently became the latest jurisdiction to allow adult cannabis use, effective this July 1. But just days later, a court upheld United States federal tax laws that treat state-licensed cannabis businesses as illegal drug traffickers.

The pathway to the U.S. cannabis market is being watched closely by Canadian companies eager to enter the frenzied space. But an already well-trodden path exists for those companies seeking an early advantage over their Canadian peers - CBD. 

As the U.S. cannabis market remains closed due to the drug still illegal federally, although more than half of the country's states have passed measures allowing its sale for either medical or recreational purposes, Canadian companies have begun to move in earnest to establish a U.S. presence but solely in the CBD space. 

As more and more states legalize marjiuana, federal legalization in the U.S. seems inevitable. Not only are more states passing legislation to permit recreational use, but a vast majority of Americans also support legalization. According to a recent survey, Pew Research found that 91% of people in the U.S. believe marijuana should be legal for either medical or recreational use, with 60% in favor of both. President Joe Biden is in favor of decriminalizing marijuana, while Senate Majority Leader Chuck Schumer is ready to push ahead with full legalization efforts even if Biden isn't completely on board just yet.

After New York passed legislation to legalize recreational cannabis, we believe the government will prioritize legalization or decriminalization at the Federal level. 

New York is the 15th state to legalize recreational cannabis and we are bullish on the trend that we are seeing at the state level. From Virginia to South Dakota, several conservative markets have jumped on the legal recreational cannabis bandwagon and this is a trend that we find to be significant. 

Canadian cannabis companies are cheering the reintroduction of the SAFE Banking Act to the U.S. House of Representatives today.

The act proposes offering safe harbour to financial institutions like banks and insurance companies, who provide services to cannabis businesses and has long been seen as helpful for Canadian pot companies looking to expand to the U.S.

The National Cannabis Industry Association says the bill was previously approved by the house in a 321-103 vote in September 2019 and then headed to the senate, but didn't move forward and had to be tabled again because of the COVID-19 pandemic.