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Money News

In Canada, Marijuana Prohibition is About to Go Up in Smoke

June 20, 2018

  • Canada formally legalized marijuana for recreational use
  • Revenues from pot sales are expected to top $4 billion per year
  • You can invest in the industry on Stash
2 min read

Canada is lit.

The Canadian government took a giant leap toward legalizing marijuana and is poised to become the second country in the world to end cannabis prohibition on a national scale.

Bill-45, the Cannabis Act, has completed its journey after more than a year of working its way through Canada’s legislature. The effort is supported by Canada’s Liberal party and Prime Minister Justin Trudeau, and was also a key part of Trudeau’s campaign platform in 2015.

Uruguay became the first country to legalize marijuana for recreational use in 2013, and many other countries have decriminalized it, though bar sales. In the U.S., nine states have legalized marijuana for recreational use, though it remains illegal under federal law.

Canada will become the first G7 country to cross the reefer Rubicon.

Canada gives legalization the green light

Under the new legal framework, Canada’s new regulations will allow people ages 18 and over to purchase marijuana from licensed stores. They will also be able to grow their own at home, except where prohibited by local laws. Stores selling cannabis for recreational consumption could open as soon as August or September.

Ultimately, how and when those stores open to the public will be up to individual provinces and territories.

But possible dangers to public health are on the government’s radar, too. It’s expected that the Canadian government will set up marketing and public-relations campaigns to educate and inform about the effects of marijuana use—similar to what you might see in the U.S. concerning tobacco.

Seeing green

Proponents of legalization in Canada look at the potential financial benefits—specifically, that recreational sales could generate revenues of more than $4 billion per year, according to a report from professional services firm Deloitte.

All told, it could be an economic boon for Canada. Entrepreneurs should get the chance to jump into a once-blacklisted market, thousands of jobs will likely be created, and the government should reap the benefits of increased tax revenues.

In the U.S., legal marijuana has created more than 123,000 jobs, according to industry data.

And as far as taxation, government officials hope to levy a 10% sales tax, or roughly $1 per every gram sold—whichever is greater.

How you can capitalize

A G7 country fully legalizing cannabis is a first, and will likely act as a shot in the arm for the fledgling marijuana industry. A number of companies, some publicly-traded, already work in and around the industry, but they’re still considered to be treading on risky ground; as has investing in those companies.

Examples include Cronos Group (CRON), Aurora Cannabis (ACB), and GW Pharmaceuticals (GWPH).

In the U.S., for example, marijuana companies operating in states where cannabis is legal are still largely shut out of the traditional banking system, and are under threat of shutdown from the federal government.

But some of the world’s largest companies operate out of Canada, where laws were more lax even before legalization. Now, with an end to national prohibition, companies and investors have a safe space, legally speaking, in which they can conduct business.

Though the industry is still on shaky ground and therefore, somewhat risky, you can invest in the marijuana industry on Stash.

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By Sam Becker
Sam Becker is Stash's financial writer.

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