After months of deliberation and a final back and forth between the Canadian Senate and Parliament, Bill C-45, also known as the cannabis act, was approved on Tuesday (June 19) night.
It will become the law of the land starting on October 17, Canadian Prime Minister Justin Trudeau announced on Wednesday (June 20).
During question period on Wednesday, Trudeau declared the date, saying the provinces asked for more time on the implementation of the bill. Later, Health Minister Ginette Petitpas Taylor tweeted and confirmed the October date.
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“[The provinces and territories] needed more time to transition into this framework,” Trudeau said during a remark at the end of the Parliamentary session.
Cannabis will be legal in Canada beginning on October 17, 2018.
I’m so proud of the Cannabis Act – this historic legislation will end prohibition and replace it with a sensible, responsible and equitable cannabis policy.
— Ginette Petitpas Taylor (@GPTaylorMRD) June 20, 2018
After the Senate received the bill back from the House, with a clear rejection to a majority of the Senators’ proposed amendments, the historic vote was determined with a 52-to-29 win with two abstentions. This decision will open the gates to an estimated multibillion-dollar industry in Canada.
“With the Cannabis Act, the business environment in Canada is expected to move toward cooperation with the support of federal, provincial and local government,” said Kenneth Sam, partner at law firm Dorsey & Whitney and a member of the firm’s Canada cross-border practise group.
He added, “[a]n entire industry is developing and there are ground floor opportunities for businesses and governments to emerge as leaders in the industry.”
Restrictions still present despite bill approval
Even though Bill C-45’s approval indicates marijuana will officially be legal in Canada, Justice Minister Jody Wilson-Raybould said on Tuesday that current restrictions still apply and will do so until the government’s picked date of implementation in October.
In February, the health minister said that once the bill obtained royal assent, it would take the government eight to 12 weeks in order to actually kick off sales of recreational cannabis.
The government indicated in a statement that Health Canada will publish “final regulations” for the cannabis act and will expand public outreach meant to educate consumers on the limitations of the bill related to consumption and possession of the drug.
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Before Canada passed its bill, only Uruguay had been able to completely legalize the drug through a sweeping national policy. In the US, nine states have legalized recreational use of the drug, while 29 states have made medical use legal.
Thanks to pending royal assent for the bill, Trudeau and the Liberals are able to deliver on a key campaign promise for their government.
Despite the legalization of the drug, many restrictions will remain in place for its consumption. Edibles and other infused products will remain banned for the first year of recreational sales. That’s a decision advocates have said will cause consumers to continue selecting products on the black market.
“There will be strict limits on advertising marijuana, and it will likely be sold in uniform packages that carry health warnings as their only decoration,” the New York Times reported.
Provinces have been allowed to select how consumers will obtain cannabis through retail methods. In Ontario, a government-run chain of stores is set to open this year, while in Manitoba privately run stores will be made available to consumers. BC has announced it will run its own stores while also allowing some form of retail presence from the private sector.
Bill passed, public market runup incoming?
Jason Zandberg, an analyst covering the cannabis space for PI Financial, told the Investing News Network (INN) he expects retail winners in the public market to provide a boom for the sector.
“I expect [rallies to happen] when we see some licensing on the retail side, those winners that were awarded licenses,” he said.
In May, INN also asked Russell Stanley, cannabis analyst with Echelon Wealth, his opinion on whether the public sector will see a runup after the setting of the date of legalization.
“There is the potential for these stocks — to or for sentiment — to improve once the doors are open and people come to understand how much product is in demand,” Stanley said.
When it comes to which particular announcements will have a significant impact on the market, Stanley told INN he sees more M&A activity and the entrance of “strategic investors” as the key potential drivers.
Initial market reaction to cannabis act approval
In Wednesday’s trading session, cannabis stocks and public exchange-traded funds (ETFs) traded upward in a moderated fashion.
At market closure, the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) had increased 3.43 percent in value, reaching a price of C$19.60. Additionally, the Evolve Marijuana ETF (TSX:SEED) went up 4.23 percent and finished the day at a value of C$18.
The Canadian Marijuana Index opened on Wednesday with a 20-point increase to begin tracking at a value of 655.63 points. After the public markets closed, the index finished with a value of 654.14 points, a 4.24-percent increase from its previous close.
This index tracks 24 public cannabis companies across the Toronto Stock Exchange, TSX Venture Exchange and Canadian Securities Exchange.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Hiku Brands is a client of the Investing News Network. This article is not paid-for content.