Pot shares get a boost from legalization plans
Reports legislation will be introduced next month gives investors ‘clarity’
Publicly traded medical marijuana companies got a bounce Monday after news reports provided clarity on the federal government’s plan for marijuana, suggesting it will be legal for pot smokers in time to celebrate Canada Day next year.
The federal government plans to introduce marijuana legalization legislation next month, fulfilling the Liberals’ promise to do so this spring. That will be enough time to enact legalization by Canada Day 2018, CBC reported Sunday night.
The media report is largely in line with analysts’ expectations, but “we nonetheless believe that it provides investors with a greater degree of clarity and certainty of what the recreational market could look like,” Canaccord Genuity analyst Neil Maruoka said in a report called 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 news gave a sector-wide bounce to Canadian medical marijuana stocks.
Aurora Cannabis Inc. shares got one of the biggest boosts Monday, jumping almost 11 per cent to close at $2.53 per share. The Albertabased company building a stateof-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 11 per cent to $10.98, while recall-plagued OrganiGram Holdings Inc. stock saw a similar increase to $2.47 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 follow closely the recommendations set out in a federal task force on legalization released in November.
The 80-recommendation report was celebrated by Canada’s licensed producers as it suggests the current Health Canada system for medical marijuana will remain intact, ensuring they will be the main suppliers for recreational marijuana. The system is 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, 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.
Minister of Justice Jody Wilson-Raybould’s office would not confirm the April timeline Monday, saying only: “In order to meet our commitment to legalize, the legislation will need to pass through the parliamentary process in a timely fashion.”
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.