CANADA GOING CANNABIS – Will the Stock Bubble Burst?
Canada legalized Cannabis about 16 years ago for medicinal purposes and is stepping into unknown territory in July 2018 by lifting the restrictions and allowing the free sale of it for recreational purposes too.
There are moves by the conservatives in and out of the Canadian Government to block this endeavor which Prime Minister Justin Trudeau introduced as a bill early 2017.
There are no signs that it will be abated and in all probability the legalization of Cannabis in Canada would come into effect in July 2018 and from then on it would be a free for all and where it would take Canada, “only time will tell.”
Anyway that is a matter to be seen later, in the meantime with the impending opening of the sluice gates of the “Cannabis Dam” in a few months time four major players have come into the public domain.
They have vast interests in the Cannabis industry and have been offering stocks traded on the Stock Exchanges and have had them rising steadily even peaking on January 23 morning and dropping again to normal levels back again.
The returns have been attractive as the growth has been steady and most investors are apprehensive after the stocks of one of the four major players, Aphria Inc, dropped sharply.
The Cannabis industry
This should be taken with a pinch of salt as it is envisaged that the future of Cannabis as an investment tool is definitely going to bring good healthy returns.
The present Canadian market for legalized medicinal Cannabis is at a modest $ 1.3 billion but the forecast once the legalization comes into effect through the next couple of years is expected to reach a whopping $ 6.0 billion, in 2021.
There would be a concerted effort by the Cannabis industry to dislodge the alcohol and cigarette industries and we could see a new industrial war breaking out.
Where this would take Canada in the future nobody would be able to visualize but with Cannabis, alcohol and cigarettes all on the same platform, it is going to be interesting to see the outcome in the next decade.
In the meantime the stock markets would be kept very busy with interests in this new line of business which is still in its nascent stage burgeoning to unprecedented levels.
It should be expected as a first in world trade and no country has had the audacity to legalize Cannabis as a recreational drug or if one prefers calling it anything else.
On the contrary this could be a good step in the right direction as far as Canada is concerned in particular and the world in general to study the former as a “guinea pig” and then tread slowly watching what would transpire in the future.
The four major investors are pumping money into their planting programs and are expanding their investments and this would definitely have a positive impact on their stocks which could go nowhere but up.
It is very unlikely that there could be a crash in the stock market with the demand for cannabis dropping and consumers using it for medicinal or recreational purposes abstaining from its use.
These early days of January there where are no indications that such a thing could be seen even on the distant horizon but what could be seen is that once the legalization comes into effect there would not be one leaf of cannabis left on any shelf for anyone to buy.
Hence it could be one mad rush with everyone trying to see and experience what all this fuss has been about the use of Cannabis for so many centuries.
That alone is going to tickle not only the consumers but the stock market too and the general contention is that, there would be a big bubble that would burst and Cannabis stocks would soar and those who would take the gamble are sure to walk all the way to their banks, laughing.
The other governments of the world is sure to look at Canada’s pregnancy come July 2018 with gaping eyes and the nine months after that would be crucial when the virtual baby would be delivered and by that time we will know what the years ahead would be for everyone.