Canada’s booming marijuana industry cleared a major hurdle on Thursday after the Liberal government narrowly passed Bill C-45, the final piece of legislation needed to legalize recreational pot by the summer. Although marijuana stocks were down for the day, the outlook remain bright for investments.
Path to Legalization on Track
Senators voted 44 to 29 to pass the landmark bill amid efforts by the Conservative opposition to kill it. All 28 Conservative senators voted against the bill, while most independents sided with the Liberal government to pass it.
With the vote, the government remains poised to legalize recreational pot by July 1. Under the new framework, the government plans to support a growing industry while controlling how marijuana is grown, distributed and sold.
And grow it will, according to various estimates. Last year, Deloitte forecast a market base for marijuana of between $4.9 billion and $8.7 billion. When factoring direct and indirect growth, the total footprint of recreational cannabis could reach $22.6 billion.
At the same time, the country’s medical marijuana market is growing much faster than previously expected. According to Brian Tang and Anthony de Ruijter of Fundamental Research Corp, the nation’s medical marijuana industry expanded 1,500% in less tahn three years.
Some of Canada’s biggest marijuana companies are Canopy Growth Corp (WEED), Aphira Inc. (APH), Medreleaf Corp (LEAF) and Aurora Cannabis Inc. (ACB).
That said, the path forward isn’t without risk. Provincial disputes regarding taxation and distribution could impact the law’s implementation later this year. At the same time, cannabis companies have very little pricing power due to illicit suppliers operating in the black market.
An increasingly crowded market is another challenge some analysts foresee for Canadian companies. There are about 70 publicly traded pot companies in Canada, which is an extremely high number given the current size of