In a recent tweet, the Canada Border Services Agency (CBSA) reminded us that transporting CBD oil into Canada remains illegal. While in most places south of the 49^th parallel what CBSA has to say is of little consequence, it certainly matters here in Washington State, where you’re never too far away from the Canadian border. The full text of the tweet reads:

#DYK that transporting #CBDOil across the border remains illegal? Transporting any form of #cannabis across the border without a permit or exemption authorized by @GovCanHealth remains a serious offence. #DontBringItIn #DontTakeItOut

With the coming into force of the Cannabis Act on October 17, 2019, recreational marijuana use became legal on both sides of Washington State’s 427-mile border with British Columbia, as well as other stretches of the U.S.-Canada boundary. This created a situation ripe for confusion. The man (or woman) on the Amtrak Cascades might reasonably conclude that there is nothing wrong with taking a cannabis product bought legally at a Seattle shop to Vancouver, where it can also be purchased legally.

However, as the Canadian government made clear in the information sheet it sent to every household in the country prior to the Cannabis Act’s effective date: “It’s illegal to take cannabis and cannabis products, including those with CBD, across the Canadian border, whether you’re leaving or coming to Canada. This applies to all countries, whether cannabis is legal there or not.”

With CBD products also on the hook, the potential for confusion extends to much of the borderlands. For instance, while Montana has a much stricter cannabis regime than Washington State, THC-free CBD products are not illegal in Big Sky Country. This puts not just the marijuana aficionado from Tacoma on his way to party in Van at risk of border trouble, but also the arthritic retiree from Helena heading up for a weekend in Banff.

To be fair, it’s not uncommon at all for products that are legal on both sides of a border to be subject to customs controls, for revenue and/or regulatory reasons. That said, the situation with cannabis along the U.S.-Canada border is more fraught with risk because it is still an illegal drug as far as the U.S. federal government is concerned.

It is perfectly understandably for U.S. Customs and Border Protection (CBP) to be on the lookout for cannabis products. The agency is tasked with enforcing federal law, and logically their officers in Metaline Falls, Washington should not go about their duties any differently that their colleagues 55 miles away in Eastport, Idaho. However, it is clear appears that the Feds are going far beyond that—with Canadians feeling much of the pain.

The CBC is likely not exaggerating when it reports, “Thousands of Canadians have been denied entry to the U.S. simply for admitting they’ve smoked a joint once in their lives.” As my colleague Akshat Divatia recently explained:

U.S. law will not recognize any amnesty or pardon by Canadian authorities for cannabis-related convictions. Admitting to a CBP officer that you used marijuana any time before legalization is the equivalent of a formal court conviction for that crime and you will likely be denied entry into the United States.”

The same CBC article notes than an “unsuspecting CBD oil user”—remember our arthritic retiree—could be “banned from entering the [U.S.] for life.” But you don’t even need to carry or even have used cannabis products to get in trouble. As Akshat notes:

Those who legally work in the Canadian cannabis industry must provide details about their role and convince U.S. border officers that their trip to the U.S. is purely personal. Cannabis workers will likely need to prove that while in the U.S., they will not engage in any networking or strategic meetings, presentations, marketing efforts, or any manufacturing or distribution activities with customers or cannabis industry colleagues.”

Stated less elegantly, coming to the U.S. for cannabis-related business is a no-no. Even investing in cannabis businesses could theoretically get you banned for life from the United States. With this kind of onslaught, even innocuous activities such as changing planes at a U.S. airport to attend a cannabis conference in a third country are causes of concern.

It doesn’t stop there, though. In at least one instance that we know of, CBP took away NEXUS privileges from someone who wrote a reference letter for a fellow Canadian applying for a waiver for a marijuana-related ineligibility. This is worth repeating. They did not take away NEXUS privileges from someone who him or herself had a marijuana ineligibility, but rather from someone who wanted to help that person by writing a letter. This would be akin to a lawyer getting sanctioned for serving as a character reference for a bar applicant who had a run-in with the law in the past.

You might think, well, it’s just NEXUS—wait in the regular line like the rest of us. But the ability to avoid long waits at the border can be critical for persons engaged in cross-border business activities. And, again, the privileges are being taken away for writing a letter.

I wish I could say that the bottom line is as simple as not taking any cannabis products—whether THC, CBD or somewhere in between—with you when you cross the border. However, the risks run much deeper for Canadians and other foreigners with any cannabis involvement heading south. And to be sure, this includes foreigners living in the United States, who are pretty much subject to the same ineligibilities.

If in doubt, talk to a lawyer before you go anywhere near the Peace Arch. DON’T take chances: The consequences can be as serious as they get.

I chuckled in spite of myself and said, “That is not going to happen that soon, and it may not be possible to accomplish even in a few months.” China’s government has a tight grip on its money (technically renminbi (人民币) means “the people’s money”, but the people can’t be bothered to look after their own money, right?). Even when times are good, China controls foreign currency leaving the country, especially U.S. dollars. But times are not good in China, despite recent reassurances from Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission. How do we know times are not good in China? There are a lot of smart people in the world who track where money flows and how that movement (or lack thereof) impacts our qualities of life. They are called macro (big picture) economists. These economists have noticed that (a) although China is encouraging foreign investment in its banking and insurance sectors, promising ownership of up to 100% by foreign investors, so far no one is biting, and (b) foreign lending institutions are loathe to provide capital to Chinese banks and industries, seeing economic risks in China everywhere they look.

Chinese would-be investors in U.S. ventures, including hot market cannabis enterprises, are finding it exceedingly difficult to get money out of China, even their allotted USD $50,000 in foreign currency that each Chinese national is supposed to be permitted to purchase and transfer out of China, according to China’s State Administration of Foreign Exchange. But in practice, such applications are being more closely scrutinized by China’s ever-present bureaucratic machine, and even China’s elites like the former central bank adviser, Yu Yongding, are being denied access to foreign currency. That means your prospective Chinese investor or business partner (or customer who owes you money for your raw inputs, such as U.S. timber) will not be able to get you those U.S. dollars you have been waiting for any time soon, no matter how well connected they are.

Why is China holding onto U.S. dollars? We’ve discussed this (and all things related, on our firm’s China Law Blog) but China needs to maintain its foreign exchange reserves (largely held in dollars) for several reasons. One of the primary reasons is so that China can continue to fund its global export machine that does business in U.S. dollars with the rest of the world. Chinese exporters buy their raw inputs in U.S. dollars, so China’s central bank needs to keep foreign exchange reserves on hand to facilitate those transactions. A second reason is that to the extent China can keep U.S. dollars out of circulation, China can artificially keep its currency value low, which makes its exports more affordable to the U.S. and the rest of the world. China holds more than $3 trillion in of its assets in a foreign currency, which equals approximately $2,142 per capita in China’s 1.4 billion population (in comparison, the U.S.’ $126 billion in foreign exchange reserves equals approximately $385 per capita in the U.S.’ 327 million population). China’s currency restrictions are not new. These restrictions are an integral part of China’s economic policies under which China wants to keep its yuan valuation at least seven times higher than the U.S. dollar. China can also use its foreign currency holdings to buy up yuan when others are trying to dump it, to keep the yuan from freefalling in foreign exchange markets due to concerns like a trade war or ongoing economic restrictions or sanctions.

To bring this discussion full circle, if your would-be cannabis business investors are Chinese or have money in Chinese bank accounts that they are having “a little trouble” getting to your U.S. bank account, do not make any near-term plans that rely on their promised dollars, especially if the promised amount is more than $50,000. Chinese currency leaving for foreign markets is a form of capital flight to which China is keenly attuned and to which it will take great measures, both overt (currency manipulation) and covert (denying individual foreign exchange transactions in Chinese banks, even when those transactions are in sync with Chinese law).

Also, if your international investor has already applied or wants to apply for a fast-track EB-5 visa path to U.S. citizenship, their investing your marijuana venture (regardless of current state legality) is a huge red flag that will derail their application process and impact their ability (if they are or become a green card holder) to become a naturalized citizen because they will have been involved with a controlled substance under U.S. federal law. If the potential investor’s immigration attorney is not aware of that minor detail, then you can do your investor a favor and let them know. For a primer on foreign investment in U.S. cannabis businesses, read this. It is reasons like this, the intersection of our firm’s international practice and our cannabis practice, that make my daily law practice so interesting, intellectually rigorous, and fun.

The Policy Manual is self-defined by the USCIS as its centralized online repository for immigration policies. It serves as a guide for immigration officers to follow when adjudicating applications and petitions.

Prohibited cannabis-related activity, as we explained previously, includes possession, prior use, as well as employment or investment in cannabis industry, each of which is deemed a violation of the federal Controlled Substances Act (CSA). In all, it’s a very broad array of exclusionary activity.

Lifetime bans on Canadians have increased public awareness that foreign nationals can be deemed inadmissible and refused entry into the U.S. based on their involvement in cannabis-related activity. It is not well-known, however, that such prohibitions may also affect lawful permanent residents of the U.S. (i.e. green card holders). The USCIS’s announcement on Friday, clarifying that cannabis-related activity (including activity that is legal under state law) creates a conditional bar on one’s eligibility to naturalize, is aimed at clarifying this misconception.

Naturalization is the process by which a green card holder can become a U.S. citizen upon meeting five core requirements: (1) be a green card holder for the statutory period (at least five years at the time of filing the naturalization application, or at least three years if the green card holder has been married to the same U.S. citizen spouse during that entire time); (2) be physically present in the U.S. for at least half of the applicable statutory period; (3) be continuously domiciled in the U.S. during the applicable statutory period; (4) possess “good moral character” (GMC); and, (5) demonstrate a willingness to actively support the Constitution of the U.S.

Of those prerequisites, the focus of this post is the GMC requirement. In order to demonstrate GMC, the applicant must demonstrate a lack of involvement in a series of unlawful activities ranging from felonies to a failure to register for Selective Service.

Murder and other felonies result in a permanent bar to naturalization, meaning that the applicant will forever fail the GMC requirement regardless of how far back in the past the criminal conduct took place.

Apart from felonies, the Policy Manual, in Part F, Chapter 5, includes a laundry list of criminal activities that result in a conditional bar to citizenship, meaning that such conduct within the statutory period will prevent an applicant from naturalizing. Cannabis-related activity is among those crimes.

It is important to note that the Policy Manual specifies that an applicant may be conditionally-barred from establishing GMC not just because of “a conviction” for a cannabis-related offense, but also for:

• An “admission” to having committed such an offense;
• An “admission to committing acts that constitute the essential elements of a violation of any controlled substance law”;
• A “conviction or admission that the applicant has been a trafficker in a controlled substance, or benefited financially from a spouse or parent’s trafficking”; and even
• “Possession of controlled substance related paraphernalia”.

Somewhere, Jeff Sessions is smiling. Failure to establish GMC for any of the above could not only result in a denial of the naturalization application, but also jeopardize the applicant’s ability to preserve the green card, and result in removal from the U.S.

The recent update to the Policy Manual also spells out the conditional bar to GMC applies even where the offense may have taken place in a state that has laws permitting “medical” or “recreational” use of marijuana because of its classification as a ‘Schedule I’ drug under the CSA. The updated Policy Manual language is crystal clear:

Such an offense under federal law may include, but is not limited to, possession, manufacture or production, or distribution or dispensing of marijuana. For example, possession of marijuana for recreational or medical purposes or employment in the marijuana industry may constitute conduct that violates federal controlled substance laws. Depending on the specific facts of the case, these activities, whether established by a conviction or an admission by the applicant, may preclude a finding of GMC for the applicant during the statutory period….Note that even if an applicant does not have a conviction or make a valid admission to a marijuana-related offense, he or she may be unable to meet the burden of proof to show that he or she has not committed such an offense.

A conditional bar is difficult to overcome because it requires the applicant to show “extenuating circumstance” about why a particular unlawful act was committed. Such extenuating circumstances must have occurred before or at the time the unlawful act was committed. The Policy Manual explicitly instructs officers to disregard any evidence of an applicant’s subsequent reform, or to evaluate any positive factors about the applicant’s character when making a decision on a naturalization application.

With its April 19, 2019 Policy Manual update, the USCIS has shown its zealous commitment to interpreting marijuana use under the 1971 federal CSA in spite of the tide of marijuana legalization that has swept nearly half the states in our union. It’s unfortunate, but green card holders and other affected parties should be warned.