I would ask where is the majority of your target audience? Where will you traffic be coming from? Is the content static dynamic? As far as the legality in the US or Canada I am not sure but I would say that the laws would probably be similar. I don't see anything that would stand out legally on either country that would constitute a reason NOT to host in either particular country.
depending on what your site's primary content is you would likely be doing your self a service by figuring out where your primary users are from. A easy and quick browsing experience will keep users coming back and help build your site's community.
When it comes to the difference between hosting in the stats vs. Canada I would think the difference would be so minimal your better served by going based off of the price and reputation rather than location. Having your primary users in China and hosting in Chicago is one thing but going from the states to Canada really shouldn't be too big of an issue.