Shares of several notable Canadian marijuana companies—including Cronos Group (CRON - Free Report) , Canopy Growth (CGC - Free Report) , and Aurora Cannabis —moved higher in early morning trading Wednesday on the back of news that recreational marijuana will soon be legal in the country.
Canada will become only the second nation in the world to permit a nationwide recreational cannabis market after its Senate approved a historic legalization bill with a vote of 52-29. Dubbed the “Cannabis Act,” Bill C-45 is the result of a campaign promise from Prime Minister Justin Trudeau, who argued that legalization will reduce marijuana-related crime and keep the drug away from younger users.
Bill C-45 has faced a lengthy legislative process, having first been introduced in April 2017 and passing through the House of Commons in November. Approval by the Senate on Tuesday means Canada will join Uruguay on the short list of countries to approve nationwide recreational cannabis use.
The Canadian federal government hoped to implement the new law by July 2018, but provinces and territories—which will be responsible for creating their own rules on marijuana sales—said they would need eight to 12 weeks after approval to properly transition.
Once the bill is fully implemented, Canadian adults will be able to hold up to 30 grams of legal cannabis in public, cultivate up to four plants in their homes, and manufacture edibles for personal consumption. Of course, they will still face strict rules in terms of purchase and use.
For instance, marijuana will not be available for purchase in the same locations as alcohol or tobacco, and retailers will need to be licensed by the provinces, territories, or federal government. Canada also updated its impaired driving laws to add new regulations for those driving under the influence of marijuana.
Bill C-45 established the minimum age for consumption at 18 years, although provinces can choose to raise that age if they choose.
The bill has been widely expected to be approved for several months now, but investors on Wednesday morning displayed some signs of relief that the process was finally over.
Shares of Cronos Group, the first Canadian marijuana company to list on an American exchange, opened higher and quickly touched an intraday peak of $7.40, up about 7.9% from Tuesday’s close. Shares sunk from that high shortly thereafter, but it does seem that medical distributors like Cronos are already positioned to transition to the recreational market.
Other popular names like Canopy Growth and Aurora Cannabis also saw some morning gains. CGC added as much as 5.8% before slumping back toward its previous close, while ACBFF was still hovering about 2% higher through early morning trading hours.
Still, it will be a challenging regulatory road for these companies to seek and receive recreational approval. This market remains relatively uncharted territory for global investors, and risks are still certainly present. Interested readers should continue to keep their eyes on these tickers as Canadian provinces work to officially implement the law in the coming weeks.
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