Look for June to be groundbreaking on the cannabis front, says analyst Neil Maruoka of Cannacord Genuity, who argues that investors are now flocking to the cannabis sector in expectation that, finally, rec legalization in Canada will become a reality.
The cannabis countdown is on! Only days are left before the Canadian Senate conducts its third and final reading of Bills C-45 and C-46 of the so-called Cannabis Act, scheduled for voting on June 7. If the bills are passed, they’ll head back to the House of Commons for the approval of amendments and then back to the Senate for Royal Assent. After that, the federal government has promised to give a lag period for provincial and territorial governments to prepare for the new market — which means that doors still won’t open for at least another couple of months.
Maruoka says that June should be “a watershed moment” not just for Canada’s marijuana industry but for the global cannabis business, as Canada will be the first major country to make rec pot legal.
“We believe that expectations are that the legislation will be approved by the Senate at its June 7th vote,” says Maruoka in an industry update on Monday. “We also believe that Royal Assent and implementation of the recreational cannabis legislation will likely extend well beyond the federal government’s initial July 1st target. An optimistic view would target the first adult-use sale some time in August. However, we believe that practical considerations and provincial logistics could push availability of cannabis at the retail level well into September and, possibly, even October.”
Independent Senator and sponsor of Bill C-45 Tony Dean recently said his belief that the legislation will pass and that a late-August to mid-September date is reasonable. At the same time, Dean has stated that the specific timeline is less important than the fact that the legislation has seen a thorough vetting by both Houses.
“What I can tell you after 14 months in Parliament and review by five committees of the Senate and there again in committee and by third reading, we will have exhausted our examination of this legislation and every Senator will know everything that she or he needs to know to make an informed decision. Look I think this is good public policy. I think that the vote will be affirmative. I think our legislation will pass,” Dean said.
Maruoka argues that Canada’s pot stocks aren’t likely to take a major hit even if legislation gets pushed back a little further than expected.
“While there are several hurdles that remain, we believe that a modest delay is priced in to LP stocks and we are unlikely to be concerned unless any potential delay stretches well in to the fourth quarter of this year,” says the analyst.
Maruoka points out that several major provinces have yet to announce initial tender allotments, including Ontario, Alberta and BC.