On Thursday, Liberal Prime Minister Justin Trudeau introduced a bill that would legalize marijuana for recreational purposes. It would be the first developed country in the world to fully legalize pot since the international war on drugs began in the 1970s. The government hopes to clear the parliamentary and procedural hurdles to make pot legal by July 1, 2018.
The bill would allow people to own up to 30 grams of dried or fresh cannabis and sets the minimum at 18 years of age, though provinces and territories can set a higher legal age. Consumers can grow up to four plants at home or buy from a licensed retailer. The federal government will handle licensing producers while provincial governments will manage distribution and retail sales.
Speculators have dived into Canadian marijuana stocks raising concerns of a green bubble. Only two marijuana producers are showing any profits. Most companies are spending money to increase their production facilities in anticipation of increase recreational use. None of the players know the exact size of the recreational market, with sales estimates ranging from nearly $5 billion to roughly $10 billion.
The Canadian marijuana index which contains 12 stocks already has a market cap of over 5 billion.
|Marijuana Index||Ticker||Market Cap|
|Canopy Growth Corporation||WEED||1.61b|
|Aurora Cannabis Inc.||ACB||903.73m|
|Cronos Group Inc.||MJN||411.54m|
|Supreme Pharmaceuticals Inc||SL||293.17m|
|OrganiGram Holdings Inc||OGI||285.50m|
|CanniMed Therapeutics Inc.||CMED||274.54m|
|Emerald Health Therapeutics I||EMH||126.65m|
|THC Biomed Intl Ltd||THC||77.32m|
|Naturally Splendid Enterprises||NSP||20.90m|
Beware that insiders have been selling according to Bloomberg!
“Since March 1, five directors, officers and board members with Canopy Growth Corp. sold 3.2 million shares worth at least $7.5 million, including Chief Executive Officer Bruce Linton, who sold $3.7 million worth of his holdings, according to data compiled by Bloomberg. Between March 1 and April 10, eight executives and the chief cultivator for Aurora Cannabis Inc. sold a total of 4.9 million shares worth $11.8 million, data show.”
A found two companies listed on U.S. exchanges that are in the medicinal marijuana field that look interesting.
AbbVie (ABBV) is ahead of the field in medicinal marijuana because its cannabis-based drug Marinol has already been approved by the Food and Drug Administration and is currently being marketed. Marinol relieves nausea and vomiting in patients undergoing chemotherapy. It is also used for AIDS patients who have lost their appetites.
GW Pharmaceuticals (GWPH) could be a growth play in the medicinal marijuana field. With a market cap of $2.16 billion, the company has researched marijuana-based medicines since 1990 and has a promising drug called Epidiolex. The drug has not been approved by the Food and Drug Administration, but it is showing effectiveness in treating epileptic seizures. It is cannabis-based and could gain wide acceptance quickly if approved.
On a personal note, my 84 year old mother suffers from high levels of anxiety. Her doctor prescribed a number of different anxiety drugs but she couldn’t tolerate the side effects. Out of desperation, I convinced her reluctant doctor to refer her to a cannabis clinic for assessment. She has been approved and is currently ingesting small quantities of cannabis oil. It is still too early to tell but I have noticed some improvement.