Canada is showing us how to legalize pot.
Canada is showing us how to legalize pot. Marcel ter Bekke/ Getty

You can walk into a store in Canada today and walk out with legal pot. This is a huge deal. It's more radical than anything that has happened in the United States.

That's because Canada actually legalized pot. We have never done that. Marijuana is entirely illegal in every single state in the US. Some places like Washington and California have changed local laws so their states can profit off the sale of pot, but that doesn't change the fact that federal law considers weed a Schedule I substance, the most illegal and most dangerous class of substances. If this sounds like a contradiction, that's because it is. State laws contradict federal laws, but that doesn't make pot any less illegal in the US.

Our sensible neighbors to the north have legalized pot at the federal level, and then left it up to individual territories and provinces to write their own rules. That leaves a patchwork of specific regulations with differences on things like the legal age for pot—Quebec’s is 18, British Columbia is 19—but the overall system treats pot as an entirely legal substance.

This difference has big implications. Canadian pot will be safer than American pot because multiple states and their central government can coordinate how to regulate cannabis testing and safety standards. They can have reasonable commercial regulations, with certain provinces allowing delivery by mail and eventually sales in some supermarkets. And, perhaps most importantly for the future of commercial cannabis, nationwide legalization allows for corporations to invest in pot. Big, international, billion-dollar-big corporations.

Beer companies have been some of the first to send money to Canada. Molson Coors is investing in pot drinks, and Constellation Brands, which owns Corona and Ballast Point, bought a $3.8 billion stake in Canopy Growth Corp., a Canadian pot growing company that has a market evaluation of $12.22 billion. Another Canadian pot company, Tillray Inc., has a stock market value of $14.8 billion.

Let’s compare that to our Washington pot market, where state laws allow the sale of pot but federal law considers any pot business owner to be a felon. One of our largest pot companies is Northwest Cannabis Solutions, which has been selling millions of dollars of pot every month for years. Their parent company happens to be listed on the Canadian stock exchange, giving us an easy way to compare the perceived value of a Canadian pot company and an American one. NWCS’s stock is worth only 60 cents a share (compared to Tilray’s $148 a share), and their entire market capitalization is only $51.443 million. That’s tiny compared to the multi-billion companies up North.

These billion dollar deals have been making Canada's small-scale pot growers worried, and they should be. These big companies are going to be able to crowd out the market, which means making a family run farm profitable will be very difficult. As I showed in this story for FiveThirtyEight, even with federal prohibition, large companies have been able to swallow up the vast majority of Washington's pot market. Small growers will have to establish brands with strong consumer ties in order to compete in this environment. I spoke with Day 6, a radio program on the CBC, earlier this year about how small farmers can try to compete with these billion dollar corporations.

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While small farmers fight to stay alive, Canada's biggest companies will be showing the world how much money can be made on pot. Matt Karnes, founder of financial analysis firm Green Wave Advisors, said Canada's market will make a nationwide American market more likely.

"I do think it will accelerate the timeline for legalization in the US as politicians soon realize that the U.S. cannabis industry is losing out on investment dollars from multinational companies," Karnes told me an e-mail.

That's what is going to make Canada's move so radical. Just like Washington and Colorado showed that world governments can regulate pot without the world ending, Canada is going to show us that nationwide legalization is the sensible next step.