Most people in Canada who are over the age of 16 know what cannabis is. Also known as marijuana or weed, the attitudes toward cannabis are becoming close to the way that people think about alcohol or tobacco. The University of Ottawa estimates that 2.3 million Canadians smoke marijuana regularly. That’s nearly 10% of Canadians. With the annual consumption of cannabis being approximately 770,000 kilograms, that means that 28 grams of weed are being smoked for every Canadian citizen that’s over 18. (http://www.med.uottawa.ca/sim/data/Marijuana_e.htm )
This is a far cry from the sales of cigarettes or alcohol, but the fact that cannabis is still illegal for most uses is a stumbling block. While Canadian laws on cannabis are much more lax than our neighbours down south, we have been slow to legalize it. It’s possible that we wanted to see how legalizing it affected certain states, but the more likely culprit was conservative values.
Former Prime Minister Stephen Harper was adamantly against the use of cannabis. Harper was much harsher on weed than he was on alcohol or cigarettes. Our current Prime Minister, Justin Trudeau, has a much more liberal (pun intended) view on smoking weed. While he was on the campaign trail Trudeau announced his plans to legalize cannabis once he took office.
Alright, but what does this have to do with cannabis stocks?
It means that when cannabis becomes legalized, you could earn a lot of money from your favourite recreational herb. How? You can earn money buying weed some stocks. While most people would be surprised to learn this, there are publicly traded cannabis stocks on the stock market. That’s right. You could earn money for more marijuana by putting your money into weed stocks.
According to a study done by the Financial Post, the cannabis market is small compared to what it could be. 80 to 100 million dollars for the entire market doesn’t sound like anything to sneeze at. Except it’s pocket change when you compare it to what they project what the market could be. (http://business.financialpost.com/news/agriculture/canadian-marijuana-stocks-jump-as-liberal-wins-signals-legalization-on-the-table )
The problem right now is that weed isn’t legal.
Marijuana cannot be legally sold or purchased with the exception of medical uses. This means that the demand for cannabis stocks are low compared to what the demand could be if marijuana was legalized. Right now, there are about 40,000 Canadians who are eligible to purchase cannabis legally. But if the market was to be opened to the entire Canadian population that smokes cannabis regularly (the 2.5 million people who were mentioned above), “the market would then be worth up to $5 billion”. (http://business.financialpost.com/news/agriculture/canadian-marijuana-stocks-jump-as-liberal-wins-signals-legalization-on-the-table )
What this means for the casual investor is that the stocks that we have in the current medical marijuana companies suddenly become a lot more valuable.
After all, they are already in business and have their production models down pat. Publically traded suppliers of marijuana don’t have to worry about starting a growing op. They don’t have to navigate their way through the legal system in order to become an authorized seller. Most importantly, the current medical marijuana suppliers don’t have to worry about not having the supply to meet the demand or struggling to fill orders. (http://www.macleans.ca/news/canada/high-hopes-legalized-pot-is-on-the-way/ )
For these suppliers, the system is already in place and their stocks saw a huge increase the day that Justin Trudeau won the 2015 election. There are already people who are interested in the cannabis market and the future potential that it has. Cannabis legalization still has a ways to go, but it’s an exciting time.
The market is poised for a substantial amount of growth in a very short period of time. Especially with the newer numbers of marijuana usage.
CBC news reported in November that the numbers have jumped from the 10% reported by University of Ottawa. Currently 20% of Canadians smoke marijuana with the potential for even more Canadians to smoke cannabis once it’s legalized (http://www.cbc.ca/news/business/marijuana-pot-poll-survey-1.3312151 ).
So what can you do?
Looking into cannabis companies with publically traded stocks would be a good start. There are only a few of them which currently trade at a profit, but that might not be the case for very long. The market is ready to burst open as soon as legalization happens. And maybe after you’ve bought your stocks, you can talk to your current political representative. You know, just to let them know that you’re in favour of legalizing cannabis in Canada.