by Eric Vengroff, Financial Analyst, Cannabis Daily

As reported by numerous sources following the progress of Canada’s recreational cannabis legalization bill on May 28, the bill continues to make its way through various amendments proposed following the third reading.

Although many of the amendments were of a technical nature, a couple stand out and have captivated the media. An amendment proposed by the Conservatives that would have outlawed home-growing across the country was rejected.

Amendments passed included a maximum potency limit on cannabis products to be imposed through product regulation. Global News reported that Liberal MP Bill Blair, former Toronto Police Chief and the government’s consulting MP on cannabis legalization, said C-45 is comprehensive, “thoughtfully designed” legislation that strikes a careful balance among diverse perspectives. Mr. Blair, like most thinking people, believes that the legislation will evolve as certain behaviors from both consumers, industry and law enforcement will be monitored for any unintended consequences. Others, looking to craft a perfect bill, will look to delay and temporize on this file as the legal an illegal production, distribution, and sales juggernaut keeps advancing.

Based on the experiences of U.S. states and other sovereign governments’ legalization efforts, there will almost certainly be unintended consequences. For instance, Quebec and Manitoba have already stated that they will not allow private citizens to grow marijuana, even in the proposed federally regulated quantities of plants. Justice Minister Jody Wilson-Raybould has said the federal legislation would govern, so look for court battles between these provinces and the federal government and between citizens and their provinces. Condominium and apartment bans that are already being implemented by landlords and condo boards haven’t been tested in court yet either but be prepared. If either side thinks we’re talking the same language as tomatoes or ornamental houseplants, they may be in for a shock. Venues for legal consumption, at home or in public spaces could be years from being sorted out. Some consider the upcoming upheaval to be akin to the U.S. and Canada post-prohibition for alcohol in the 1930’s.

Meanwhile, Sean Williams from The Motley Fool reported this morning that eight Canadian licensed producers are already expected to exceed the 100,000-kilogram mark for production. Some have already passed that by a couple of touchdowns. They are:

1. Canopy Growth Corp. (NYSE: CGC, TSX:WEED): (NYSE: CGC, TSX:WEED) 500,000 kg
2. Aurora Cannabis* (TSX:ACB): 430,000 kg
3. Aphria (TSX:APH) 230,000 kg
4. MedReleaf (TSX:LEAF)**: 140,000 kg
5. The Green Organic Dutchman (NASDAQOTH: TGODF): 116,000 kg
6. OrganiGram Holdings(CVE: OGI, (NASDAQOTH: OGRMF): 113,000 kg
7. Hydropothecary (NASDAQOTH: HYYDF): 108,000 kg
8. Emerald Health Therapeutics (TSXV:EMH): Over 100,000 kg
* Exclusive of MedReleaf
** Exclusive of Aurora Cananbis

Investors, legislators, and consumers are waiting and watching to see where all this production may end up. Between these mammoth forces, the black market, which is ¬already service the recreational and patient communities, and the unpredictable nature of market forces, demand and supply, things could get interesting.

The information and opinions presented here are that of the analyst and do not represent the thoughts and opinions of this website.  The analyst does not own or represent any of the companies listed in this article and receives no compensation from any party mentioned in this article. Readers are urged to do their own research and due diligence and should seek advice from an independent financial advisor before making any financial investment.

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