Monday, January 8, 2018
The Marijuana Industry in Canada – High Times in 2018
During our last federal election in 2015, our Prime Minister Justin Trudeau made many promises to the Canadian people. One of the most surprising claims was that he would make it an issue to legalize marijuana in Canada for recreational use. While at the time it seemed like a politically dangerous move, it has proven to be one of the more popular promises he made during his campaign. Legalizing recreational marijuana use is gaining popularity throughout the Western World. Many countries have adopted an “illegal” stance on marijuana, but have chosen not to enforce the law when encountering possession of it. Others have gone full blown, or essentially full-blown, legal possession and/or cultivation of the plant. Canada is on the path to legalization and the trend has become popular with not only users of marijuana, but investors looking to get in on the action. 2018 will be a turning point in Canada’s marijuana industry and in this post, I will look at what to watch for this year in the industry. Whether you believe in its legality or not, marijuana is about to become one of the hottest commodities across our country.
Where we stand
The initial plan was to introduce legal marijuana on Canada Day, July 1st, 2018. In recent conversations with the press, Trudeau lamented that the summer of 2018 would be the timeline, but not on Canada Day. Many in parliament are saying a July 2019 legalization date would be more prudent, stating provincial governments need time to get their systems in place. Despite this, on November 28th, Bill C-45 received final approval in the House of Commons by a vote of 200-82. A worthy note was that only 1 conservative voted in favor of the bill. Canada seems on it’s way to legalization, whether it is sooner or later. Right now, all that is happening is the political and legal wrangling to clarify where everyone stands on the issue. In the meantime, many cities and provinces are getting ready for the inevitable reality, hoping to get in on the potential boom.
Trudeau Rules Out Canada Day For Marijuana Legalization – The Huffington Post
Trudeau ran on a platform of legalization
Pros and Cons
The pros to legalizing recreational marijuana use are simple. The amount of tax money that could be obtained is staggering. The prime example of this boom is in Colorado, USA. The state approved a constitutional amendment in 2012 to legalize pot, which came into effect in 2014. Since then, the state has seen the industry explode. In the year of 2016, the state saw sales push past one billion, 1.3 billion to be exact. Of those sales, the state was able to obtain over 200 million dollars in tax revenue. During its first three years of legislation, sales have grown massively in Colorado from 700 million in 2014, 996 million in 2015 to 1.3 billion in 2016. In fact, the industry predicts a 25% compound rate, with sale hitting 20.2 billion in 2021. Tax revenue based on those projections would mean around 4 billion in tax money coming back to the state.
Marijuana tax revenue hit $200 million in Colorado as sales pass $1 billion – Market Watch
A common point used by anti-legalization forces is that having legal marijuana would make it easily accessible to children. During the teen years especially, the human brain develops at a rapid rate. Introducing marijuana at this time could be harmful to the development of the human brain and hinder growth. Many also believe that marijuana is a gateway drug, that causes users to venture out into other stronger, more dangerous drugs. There is always the threat of marijuana-related driver intoxication, which some believe will be more common if it is legalized. Many also believe marijuana is addictive, leading users to crave or need frequent doses. The list for detractions can go on and on, but these ones seem to be the most common.
The Business of Pot
Many companies have made the push to corner the market of marijuana in Canada. This has investors scrambling to get in on the frenzy. Several companies have emerged in Canada as forerunners in the industry including Canopy Growth, Aurora Cannabis, and CanniMed Therapeutics. These companies have poured millions of dollars into their systems to be ready for the legalization of pot in Canada. In fact, they also see Canada as a world-wide Cannabis player, scaling their operations to move beyond our borders. Last week alone, Aurora Cannabis partnered with Danish tomato and pepper producer Alfred and Son to produce and sell cannabis in Europe. There is even a marijuana Exchange Traded Fund (ETF) offered from Horizons ETF’s. This fund gathers marijuana stocks and allows you to hold a stake in them without committing to one company. The industry is on the cusp of exploding in this country, much like it did in Colorado.
Stock Prices (as of January 5, 2018)
Canopy Growth – $34.00 ($9.88, January 5, 2017)
CanniMed Therapeutics – $26.95 ($11.18, January 5, 2017)
Aurora Cannabis – $13.16 ($2.47, January 5, 2017)
Business News Network’s dedicated Marijuana News Page
Aurora Cannabis Opening the Toronto Stock Exchange
My Take
I am going to tell you where I stand on this issue, based strictly on experience. I don’t smoke marijuana and haven’t smoked it more than a few times in my lifetime. I have never purchased marijuana and don’t intend to. I do think it causes delayed development and addiction, but that is only based on my own first-hand experience with people I know. I am not a scientist and cannot prove my thoughts on this, furthermore, scientists are also divided on the subject. I believe driving while impaired on marijuana is a serious issue and should be dealt with severely. I believe marijuana should be kept out of the hands of children and teenagers and that the risk is great that they could become lifelong users is it is introduced at a young age.
12 Pros & Cons Of Marijuana Legalization – Honest Marijuana
I also believe that marijuana is no more harmful than alcohol to the general public. The prohibition of alcohol did not work because the desire for it was greater than the fear of repercussions. The same is true of marijuana. Whether someone buys it from the corner store or buys it from the local drug dealer, they will buy it. Just like cigarettes and alcohol, the way to keep it out of the hands of children is to enforce heavy penalties to licensed dealers who sell to those without identification. Heavily fine and jail those who drive while impaired, which is already occurring. Provide education on the negative side-effects of continued marijuana use and use tax money collected to do so.
I believe that the potential for Canada to be at the forefront of the global marijuana industry is too great to pass up. Canada is already known for having excellent marijuana so why not capitalize on that reputation? When you travel to China, you will see bottles of Crown Royal in restaurants and bars. Imagine if you see Canadian marijuana at cafes across the world. I believe the industry can surpass Colorado’s production and become one of the top 5 industries in Canada. The amount of tax money that can be collected is too good to pass up. Applied correctly this money has the power to alleviate many problems still faced in Canada, including the national debt and deficit.
In short, marijuana will continue to be used, no matter what the laws are. The popularity of the drug is clear, and it shows no sign of slowing down. Canada has the opportunity to corner the market and become a worldwide leader in marijuana sales. 2018 will be a turning point in this endeavor and by this time next year, we should have a good idea of where we are going in the future.
Thanks for tuning in as 2018 Trends Week begins at Budget Boss. Tune in tomorrow as I discuss the Canadian Housing Market and the possible implications on everyday Canadians. If you wish to discuss your own financial situation, please message me at joe@budgetboss.ca. Have a great day Bosses!
“Prohibition of substances which give pleasure to people does not work. Addiction is a health problem, not a moral one, and there are many proven strategies which can reduce its burden.” – Vikram Patel
Email – joe@budgetboss.ca
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