Canada recently approved legislation that will effectively allow recreational cannabis to be consumed and distrusted throughout the nation. This new legislation represents the first time a developed nation has legalized the adult-use of cannabis nationally, which is quite a large milestone as far as the industry is concerned.
The Prime Minister of Canada and avid supporter of legal cannabis, Justin Trudeau, recently stated that the new recreational laws will go into effect as soon as October 17th. The bill known as C-45 or the Cannabis Act was voted on as of Tuesday night, June 19th, and passed through the Senate vote with a large majority. Because of this, many stocks in the industry managed to climb in price, especially those concerned with the cannabis market in Canada.
The marijuana stocks at the top of the industry such as Canopy Growth (NYSE:CGC) have managed to come up in value by as much as 6.4% with others like the Cronos Group (CRON) moving up by around 5.25%. Many ETFs in the space also saw a rise in price with this news such as the ETFMG Alternative Harvest (MJ) which rose by around 2.35%. This is fair to assume however, as the market currently operates a lot on speculation given how new the industry still is. One of the other large players in the ancillary industry associated with cannabis is Scotts Miracle-Gro (NYSE:SMG). Scotts is a company that provides many different products for those attempting to grow cannabis whether it be outdoors or with hydroponic methods. The stock has come to light as the marijuana industry has changed so rapidly in the past several years.
Many Canadian stocks have been working to try and cement ties with the U.S. industry, such as the company Tilray, which filed on Wednesday for an IPO to list on the NASDAQ. The company released a statement that said “we are pioneering the future of medical cannabis research, cultivation, processing and distribution globally, and we intend to become a leader in the adult-use cannabis market in Canada once legalized. Many stocks in the cannabis industry have been working to come on board with the prestigious stock exchanges in the U.S. such as the listing of the Cronos Group earlier in the year. The company Aurora Cannabis, one of the largest marijuana producers in Canada, stated that they will be seeking new investments in the U.S. by utilizing a subsidiary as opposed to listing as a whole on the exchanges.
The company Aurora released a statement that “Recent changes in U.S. federal positioning with respect to cannabis have positively impacted the perception of risk to invest in U.S. cannabis assets,” Toronto Stock Exchange-listed Aurora said in a statement. “Entering the U.S. market now, in compliance with regulatory requirements, represents a risk/reward balance that is attractive to a well-connected and funded operators.”
The hopes are that in the near future the U.S. regulation will be able to see the success of the Canadian market, wherein they can then implement new and fair regulations that align more with what the public wants to see. It is clear that there is a large amount of much-needed reform that needs to go into place before the industry can reach its full potential in the near future. All of these new pieces of news are contributing to the growing industry and its positive view of the public. Only time will tell how well these new regulations will begin to affect the industry as a whole.
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