Marijuana companies with publicly traded shares received good news on Monday: they are now in the spotlight after news came that Canada is intending to legalize marijuana.
In accordance with the government’s promise to legalize cannabis by the end of spring, Ottawa is scheduled to introduce marijuana legalization by mid-April, allowing plenty of time for legalization enactment to occur before Canada Day in 2018.
“We nonetheless believe that it provides investors with a greater degree of clarity and certainty of what the recreational market could look like,” said Canaccord Genuity analyst Neil Maruoka in a report named “Legislation should be the tide to lift all stocks.”
“Its introduction into the House of Commons should be viewed as a significant positive industry catalyst.”
The groundbreaking news brought only high hopes and aspirations for Canadian medical marijuana stocks.
Aurora Cannabis Inc. shares got one of the biggest boosts Monday, jumping nine per cent to $2.48 per share. The Alberta-based company building a state-of-the-art Aurora Sky facility, the size of 16 football fields at the Edmonton airport, is Maruoka’s top pick in the sector.
Aurora executive vice-president Cam Battley said the news is a net positive for the industry as it solidifies the government is committed to its objectives.
“It’s cementing Canada’s world leadership with respect to the cannabis sector,” he said, adding that the sector’s growth also provides opportunities for companies in ancillary businesses — ranging from those in information technology to research.
“What this means is we can all plan we can all invest we can all start hiring and start building the world’s leading consumer cannabis system.”
Shares in Canopy Growth Corp., Canada’s biggest marijuana company, jumped nine per cent to $10.84 while recall-plagued OrganiGram Holdings Inc. stock saw a similar increase to $2.42 in Monday afternoon trading on the Toronto Stock Exchange.
Maruoka said now might be the time for investors to take some profits, as after the announcement has happened there will be little to move markets over the next year.
The rules will reportedly closely follow the recommendations set out in a federal task force on legalization released in November.
Canada’s licensed producers celebrated the 80-recommendation report as it suggests the current Health Canada system for medical marijuana will remain in tact, ensuring they will be the main suppliers for recreational marijuana. The system is very tightly controlled and highly competitive. Only about two per cent of applicants have been approved.
Provinces will control the price and distribution model and will have the ability to set an age limit that differs from the federal recommendation of 18, while Canadians who want to grow their own will be limited to four plants per household, according to the CBC.
The Liberal government will reportedly introduce legislation on or ahead of the symbolic date of April, 20 (4/20), which has become something of a counter-culture holiday on which pot smokers historically gather on Parliament Hill to advocate for legalization.
Last year on that date, Health Minister Jane Philpott stood before the United Nations to announce Canada would become just the second country in the world to legalize the drug for recreational use at the federal level after Uruguay.