Cannabis Stocks on the Rise After Canada Finalizes Recreational Cannabis

[dropcap class=”kp-dropcap”]T[/dropcap]he Senate passed Bill C-45, known as the Cannabis Act, on June 19. Prime Minister Justin Trudeau said recreational cannabis will be legalized on October 17, making Canada the second country in the world to legalize cannabis nationwide. As a result, Canadian cannabis stocks have skyrocketed with the expectation that cannabis will usher in a new era for the country.

A report from Canadian Imperial Bank of Commerce (CIBC), one of Canada’s largest banks, estimates that the cannabis industry will be a $6.5 million industry by 2020. The market will be led by recreational consumers, who CIBC predicts will account for 95 percent of sales, while the remaining five percent will be medical patients.

The Canadian Marijuana Index, an aggregate measurement of all publicly listed cannabis stocks in Canada, went up 3.34 percent after the official announcement was made. The overall North American index, which includes U.S. stocks, was up 2.28 percent. The biggest riser was Green Leaf Holdings, a Canadian Securities Exchange-listed cannabis company, with an increase of 6.81 percent.

Companies are beginning to capitalize on the new environment for the cannabis industry as Canada’s Tilray filed for an IPO with plans to list Class 2 shares on the Nasdaq under the ticker TLRY. The publisher of the magazine High Times also plans to apply for a listing on the NASDAQ later this year after an equity crowdfunding campaign to help boost the valuation ahead of an IPO.

A number of Canadian firms, including Aurora Cannabis and Canopy Growth Corp are seeing investors get excited for legalization. Aurora Cannabis is preparing for the retail market by partnering with Alcanna, which operates 229 liquor stores in Alberta and Canopy Growth Corp are planning for retail sites in Saskatchewan, Newfoundland and Labrador.