Aussie pot stocks get lit after Canada sets cannabis tax rate
Health & Biotech
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Aussie pot stocks lit up on Monday after Canada proposed a dollar-a-gram tax on legal, recreational marijuana.
At least eight ASX-listed cannabis plays have exposure to Canada — which plans to legalise marijuana for recreational use from July 1 next year.
The tax — $C1 ($1.03) per gram or 10 per cent of the retail price, whichever is higher — was in line with expectations, allowing the new legal marketplace to compete with the black market.
However, demand will far outweigh supply with four million to six million Canadians expected to use cannabis recreationally in 2018 according to government predictions.
“While the Canadian industry is investing heavily in capacity expansion, it is unlikely that it will be sufficient to meet this demand for several years,” wrote analyst Matthijs Smith in a recent Canncord Gennuity research report.
Mr Smith estimates that by 2018 Canadian recreational users of marijuana will be consuming 650,000kg of cannabis a year.
Australian growers like Cann Group (ASX:CAN) are, therefore, very keen to see the law changed so they can start exporting their raw material.
On Monday, 11 of 20 ASX cannabis stocks tracked by Stockhead gained ground.
The Hydroponics Co (ASX:THC), which markets some 600 products in Canada, jumped 27 per cent to 45c.
Auscann group (ASX:AC8) which partners with Canada’s Canopy, gained 10 per cent to 79.5c.
Creso Pharma (ASX:CPH), which recently bought Canadian medical cannabis producer Mernova Medicinal, climbed 11 per cent to 75.5c.