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Canada’s Senate has just legalised recreational marijuana — making it the first major western country to do so.

A third reading of Bill C45 ratified the Cannabis Act — “an Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts.”

The vote was passed just after 11am AEST Australian time with 56 votes in favour to 30 votes against and one abstention.

The passing of the Cannabis Act is a win for Canadian pot stocks which were up about 8 per cent this week ahead of the vote.

It will also have major ramifications for the ASX’s pot stocks.

Most ASX-listed cannabis plays are focused on medical marijuana — but huge new markets in Canada and certain US states could tempt them to consider the recreational market.

First out of the gate today was The Hydroponics Company (ASX:THC) which announced to the ASX it was “REC READY”.

The passing of the Bill was an “important driver of growth in THC’s hydroponics division” and could lead to acquisitions, THC told investors.

“A decision to legalise recreational use of cannabis will open up a significant opportunity for THC to augment our established revenue streams in Canada,” said THC’s chairman Steven Xu.

THC shares rose 3 per cent to 59.5c.

Recreational pot is expected to account for 95 per cent of the legal cannabis market in Canada.

On the other hand, cannabis segments such as medicine, cosmetics and foods may offer differentiation if legalisation leads to the entry of many more growers.

Here is a recent list of ASX cannabis stocks we published in March:

ASX CodeName3-month price change (Jan-Mar)Market Cap (end of Mar)
ZLDZELDA0.07579.31M
SCUSTEMCELL UNITED-0.00284900284915.40M
RGIROTO-GRO-0.012658227848132.68M
QBLQUEENSLAND BAUXITE-0.25925925925963.75M
MMJMMJ PHYTOTECH-0.19780219780279.52M
MXCMGC PHARMA-0.075268817204395.03M
MDCMEDLAB CLINICAL-0.214285714286131.05M
LSHLIFESPOT HEALTH0.038461538461510.87M
THCHYDROPONICS-0.21582733812968.64M
EVEEVE INVESTMENTS-0.33333333333321.99M
ESEESENSE-LAB-0.43103448275913.31M
EXLELIXINOL GLOBAL (*floated Jan 2018)0.71174.98M
CPHCRESO PHARMA-0.19354838709783.22M
CP1CANNPAL ANIMAL0.097560975609821.88M
CANCANN GROUP0.0454545454545429.80M
BOTBOTANIX PHARMACE0.61764705882478.42M
BDABOD AUSTRALIA-0.012820512820520.45M
AC8AUSCANN GROUP0.968944099379437.96M
ATPATLAS PEARLS-0.14814814814810.27M
AEBALGAE.TEC019.87M
1PG1-PAGE025M

Analysts recently revised upwards the potential market for legal cannabis in Canada and the US.

Marijuana will be a $US6.5 billion ($8.7 billion) industry by 2020 in Canada, according to research by one of Canada’s biggest banks CIBC.

That’s more than the $US5.1 billion Canadians spent on alcoholic spirits in 2017 — and it’s approaching wine sales. (That’s a worry for alcohol sellers because pot is regarded as a substitute product.)

Still, Canadian forecasts are dwarfed by existing sales of legal cannabis in the United States.

US users are already buying about $US50 billion worth of marijuana a year — a number expected to grow to $US75 billion in sales by 2030, says research firm Cowen & Co.

Canada’s legalisation is a win for its Prime Minister Justin Trudeau, who campaigned on the issue in 2015.

First Canadian legal sales of recreational pot were aimed at July 1 (Canada’s national day) but administration will take another two or three months.

The Cannabis Act now needs to go back to the Canadian House of Commons for a final sign-off.

The sale of medical marijuana has been legal in Canada since 2001.

The new law allows individuals over the age of 18 to possess up to 30 grams of marijuana for personal use.

Here’s a snapshot of how Canadian pot stocks have performed over the past year:

Canada’s cannabis stocks were rising ahead of the country’s legalisation of recreational pot use today. Source: marijuanaindex.com