Canopy Growth Corp. co-CEO Bruce Linton (right) speaks at the 2019 Cantech Investment Conference in Toronto on Wednesday Jan. 30, 2019.

The United States will not federally legalize cannabis, the co-chief executive of North America’s largest pot company predicts.

Speaking at the Cantech Investment Conference in Toronto, Canopy Growth Corp.’s (WEED.TO) Bruce Linton said he does not expect to see a “uniform federal application of access to THC voted on and passed in the U.S.”

“An astute political move is to say . . . ‘Whatever decision you make at the state [level] is the right decision. And I didn’t say I’m in favour or against cannabis,’” he said on Wednesday.

Hemp reforms were included in the recent U.S. farm bill, but cannabis with psychoactive THC above a set level remains in the same legal class as cocaine and heroin.

Recreational cannabis has been legalized by 10 U.S. states and the District of Columbia.

William Barr, U.S. President Donald Trump’s nominee for attorney general, made headlines earlier this month when he pledged to not “go after” cannabis companies that obey state laws in his Senate confirmation hearing.

If the U.S. federal government deferred authority to each state, it would rule out interstate commerce, Linton said. The U.S. would be a patchwork of fragmented markets with varying regulations, a situation that would surely impede the establishment of large-scale U.S. cannabis players.

Advantage, Canada

Meanwhile, Linton sees Canopy and its Canadian peers holding onto their first-mover advantage by securing valuable intellectual property (IP) rights that can be licensed to producers around the world — including the U.S.

“You are not going to export truckloads of cannabis. You are going to export intellectual property that creates outcomes for medical, processes to create the ingredients,” Linton said. “The window of opportunity is here.”

Canada’s ability to create and monetize IP has been a sore point for a number of observers who complain the country has been left in the dust by global rivals.

Jim Balsillie, the former chairman and co-CEO of Research in Motion, is firmly in that camp. Speaking on the same stage as Linton a day earlier, he rattled off a slew of statistics on Canada’s declining patent filings and waning innovation prowess.

Balsillie singled out cannabis as a business where building and controlling IP will become increasingly important.

“For those of you that are investing in and running cannabis companies, pay close attention to the IP strategies,” Balsillie told Cantech attendees on Tuesday. “IP rights that govern your industry include patents, trademarks and plant breeder rights. There is now a scramble to claim as much of the commons as possible, and to be able to charge economic rents through a variety of means.”

In a wide-ranging conversation with Globe and Mail journalist Jameson Berkow, Linton reflected on how far Canopy has come in a few short years.

He recalls being “fired” as a client at the Royal Bank of Canada (RY.TO) in 2015 due to the perceived risk of dealing with a pot producer. He said the bank treated him to lunch shortly before his appearance at the conference on Wednesday to discuss how to cover the cannabis sector.

Linton, whose company in many ways put pot stocks on the map after announcing a $5 billion deal with beer-maker Constellation Brands Inc. (STZ) last August, mused about Canopy eclipsing the American alcohol giant.

“For us to actually be such a disruptor to so many categories on a global basis with intellectual property that might be licensed here there and everywhere, it’s not completely unrealistic to think that you could be a much, much bigger business. That shouldn’t sound crazy,” he said. “Maybe I become the chairman.”

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