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Can Canadian Investors Learn From Cannabis Legalization in Colorado?

In a few short months, cannabis will be recreationally legalized all across Canada and will be widely available to adults just like cigarettes or alcohol are today. Even though there have been many delays and attempts to sabotage this legislation, we can say with a fair amount of certainty that weed will be widely available come July 2018.

South of the border, several states in the US have already taken this step and legalized medicinal and, subsequently recreational cannabis on a state level even though there are several federal laws they had to go around in order to make things happen. Colorado is one such state, which has shown significant profits and sales since the legalization.

One of the main figures in Colorado’s politics and cannabis legalization is Governor John Hickenlooper, who recently came out in support of Canada’s legalization and offered help in the form of advice and recommendations to ensure a smooth transition.

Taxation and pricing of this upcoming product will be a big question mark, as it will have to be set so that it fits the government, but still doesn’t leave any room for the gray and black market to thrive. Licensed producers such as Canopy Growth Corp. (TSX:WEED), Aurora Cannabis Inc. (TSX:ACB), Aphria Inc. (TSX:APH), and MedReleaf Corp. (TSX:LEAF) will likely see a huge increase in demand once legal weed hits the market.

Analysts at Canaccord Genuity calculated that the most likely and optimal price for the market will be around $8 per gram, at least till the year 2019 or 2020. After the first three years, the average price per gram is projected to drop down to $7 by 2024.

While these concerns are warranted, they are simply not enough to delay recreational legalization by a year or more, especially due to the fact that nothing horrible happened after legalization in Colorado, Washington, Nevada, etc. Even though the postponing of legalization is possible, it is not likely to happen.

Source: The Motley Fool