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 Code Name 3-month price change (Jan-Mar) Market Cap (end of Mar)
ZLD ZELDA 0.075 79.31M
SCU STEMCELL UNITED -0.002849002849 15.40M
RGI ROTO-GRO -0.0126582278481 32.68M
QBL QUEENSLAND BAUXITE -0.259259259259 63.75M
MMJ MMJ PHYTOTECH -0.197802197802 79.52M
MXC MGC PHARMA -0.0752688172043 95.03M
MDC MEDLAB CLINICAL -0.214285714286 131.05M
LSH LIFESPOT HEALTH 0.0384615384615 10.87M
THC HYDROPONICS -0.215827338129 68.64M
EVE EVE INVESTMENTS -0.333333333333 21.99M
ESE ESENSE-LAB -0.431034482759 13.31M
EXL ELIXINOL GLOBAL (*floated Jan 2018) 0.71 174.98M
CPH CRESO PHARMA -0.193548387097 83.22M
CP1 CANNPAL ANIMAL 0.0975609756098 21.88M
CAN CANN GROUP 0.0454545454545 429.80M
BOT BOTANIX PHARMACE 0.617647058824 78.42M
BDA BOD AUSTRALIA -0.0128205128205 20.45M
AC8 AUSCANN GROUP 0.968944099379 437.96M
ATP ATLAS PEARLS -0.148148148148 10.27M
AEB ALGAE.TEC 0 19.87M
1PG 1-PAGE 0 25M

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