Cannabis demand seems to be endless throughout the world and in particular Canada has shown a ravenous appetite for recreational marijuana. The country to our north seems to be leading the way in the cannabis movement. Australia has asked them for help in implementing its medical marijuana laws and it is Canadian dispensaries that are sent to deliver medical marijuana to Germany.
Canada’s president is all set to legalize marijuana in Canada set for next year but there is some skepticism that it may not happen because of not enough demand. DO you think that there is anything that could truly prevent the national legalization of recreational marijuana?
A year before recreational cannabis is expected to become legal in Canada, there’s an explosion in companies cultivating the stuff. At least 10 marijuana outfits have new listings this year on the TSX Venture Exchange and Canada Securities Exchange. Some 51 enterprises have gotten the green light to grow pot, and 815 applicants are in the queue. All told, it could be enough to raise the country’s raw-weed output more than tenfold.
This is where skeptics see froth. “If you ask people today why they don’t use, it’s a small percentage who say ‘because it’s illegal,”‘ said Neil Boyd, a criminologist at Simon Fraser University in Vancouver. “In many respects there might be an overestimation of demand.”
Long-time users and growers insist he’s wrong, but investors aren’t so sure. Producer MedReleaf Corp. tumbled as much as 28 percent last month in the worst debut for a Canadian IPO in 16 years amid concern pot stocks are overvalued. Shares of Canopy Growth Corp., the country’s first billion dollar marijuana start-up, are down 21 percent in the past three months.
The North American Medical Marijuana Index, which tracks leading cannabis stocks in the U.S. and Canada, has plunged 21 percent since Prime Minister Justin Trudeau’s government in April unveiled its plan to legalize the drug by next July, 16 years after Canada permitted it for medical use.
Of course, some of the decline may be attributed to the situation in the U.S. Many in the Trump administration, Attorney General Jeff Sessions in particular, are no friends to the industry. For Canadian companies, the risk isn’t political.
“There seems to be a little bit of investor fatigue,” said PI Financial Corp. analyst Jason Zandberg. He said they’re having trouble differentiating between the producers, new and old, and what might give them competitive advantages.
That’s to be expected, according to marijuana bulls, in a brand-new market that hasn’t even arrived yet. Parliament still has to pass the recreational law (though there’s little question it’ll do so). Then the federal government will have to write rules on taxation, and each province will have to decide how to regulate distribution.
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