About two weeks ago, Canadians woke up with a new law that will open many opportunities: cannabis legalization. This is Canada’s newest $22 billion opportunity. Canada is best known for the quality and quantity of natural resources it possesses, as well as the manufacture of its products. It is a country where the majority of investments are directed to precious stones or oil sands.
However, after the marijuana legalization for medical and recreational purposes, published by Justin Trudeau approximately two weeks ago, many analysts believe that this is the new promising market. They believe that the market could reach around $23 billion in annual revenue, which is greater than the income of beer and wine combined.
Cannabis as a growing market
Deloitte, a company that is dedicated to auditing, consulting, financial advice, advice on risks and taxes, conducted a market study after the news of the new law of legalization of marijuana for recreational purposes. According to their experts, cannabis market could reach around $23 billion in revenue. The firm established that it is very likely that the demand could reach up to 60,000 kilograms per year, which exceeds the number of licensed legal cannabis producers. This has created an attractive opportunity for all the companies that are dedicated to the cultivation, production and distribution of cannabis.
Unlike the United States, in Canada the pot was legalized in a federal level, which favors the growth of the market and provides safety to those interested in investing in cannabis. The country legalized the use of cannabis for medicinal purposes in 2001, which increased the number of legal producers of cannabis-based products. The producers allowed with the Medical Marihuana Access Regulations (MMAR) where able to cultivate legal pot in order to make medical products.
In the same way, in the next few years, Canada will become the first country with a significant percentage of marijuana exportation. As of mid-2016, two licensed companies where able to sell their cannabis-based products in Europe.
Different companies such as FSD Pharma Inc., (OTCPK:FSDDF) (C.HUGE), are working in order to obtain all the licenses to produce marijuana products for recreational purposes. Companies like FSD Pharma have invested on indoor facilities for pot cultivation, production and distribution. This arouses the interest of investors throughout the world.
Risks to consider
The use of cannabis and its derivatives goes back to 1940, when it was used by many young people as a way of recreation. However, with the United States war with the ban on this drug, it has become illegal in many countries around the world. Surprisingly, the U.S has become one of the first countries around the world to allow the legal consumption of marijuana. Despite these advances, the pot continues to be illegal in many countries, which could be an obstacle for the investments, as they could only be possible in the places where marijuana is legal.
Another risk to consider is that as the market grows, so will the cultivation at home by consumers and there may be a saturation, because marijuana is only legal at a federal level in Canada.
Nevertheless, Canada’s new legalization law has presented new opportunities on the stock market, which not only benefits its investors but the country’s economy. Hopefully, the new law will bring many opportunities, not only for the producers but for the consumers themselves, such as the ones that use it to treat nausea caused by chemotherapy and other medical uses.