How stocks responded to the vote in Canada yesterday.
The five largest Canadian marijuana stocks in terms of market cap are Canopy Growth(NASDAQOTH: TWMJF), Aurora Cannabis(NASDAQOTH: ACBFF), Aphria(NASDAQOTH: APHQF), MedReleaf(NASDAQOTH: MEDFF), and Cronos Group(NASDAQ: CRON). Each of these stocks had declined over recent weeks, at least partly because of the threat by some senators to try to derail the legislation seeking to legalize recreational marijuana.
However, with the risk removed for the latest legislative hurdle, all five of the big marijuana stocks jumped on Friday. Canopy Growth was the biggest winner, with the stock gaining more than 7% by midday. Aurora Cannabis wasn't too far behind, with gains on Friday of nearly 6%. The other stocks also moved higher, but by low single-digit percentages.
I think the magnitude of each stock's increase reflects to some degree the anticipated level of commercial success for each respective marijuana grower assuming recreational marijuana is fully legalized later this year. In its last quarter, Canopy Growth reported all-time high medical marijuana revenue -- not just for the company, but for any Canadian marijuana grower. The company should be poised to stand at the top of the recreational marijuana market, too.
Cronos Group had the smallest gain on Friday of any of the five largest Canadian marijuana stocks. I don't think it's coincidental that Cronos also has the lowest annual production capacity of the group.
What's next?
While Canadian marijuana stocks are now a little less risky than they were prior to the Senate vote, the story isn't over yet. The bill now goes to five different Senate committees.
There will almost certainly be plenty of political jockeying in the coming months. Any of the Senate committees could recommend amendments to the original legislation. Ultimately, the bill will come back to the full Senate for more debate and deliberation. A final vote is scheduled for June 7, 2018.
Some senators who are opposed to legalization of recreational marijuana think they'll get more independent senators to vote against the bill. Even the leader of the independent senators' group suspects that some of the group's members who voted for the legislation to advance to committee review will vote against it with the bill's current language.
So there's still a risk that the Senate won't pass recreational marijuana legalization. However, with the margin of victory on Thursday, it appears that the chances of passage are pretty good. But if the Senate passes the bill with amendments, there's yet another hurdle to clear. The bill will have to go back to the House of Commons for a vote.
After passage by both legislative chambers, one final step remains: royal assent. All Canadian legislation must be approved by a representative of the Crown. This is pretty much a ceremonial.
The five largest Canadian marijuana stocks in terms of market cap are Canopy Growth(NASDAQOTH: TWMJF), Aurora Cannabis(NASDAQOTH: ACBFF), Aphria(NASDAQOTH: APHQF), MedReleaf(NASDAQOTH: MEDFF), and Cronos Group(NASDAQ: CRON). Each of these stocks had declined over recent weeks, at least partly because of the threat by some senators to try to derail the legislation seeking to legalize recreational marijuana.
However, with the risk removed for the latest legislative hurdle, all five of the big marijuana stocks jumped on Friday. Canopy Growth was the biggest winner, with the stock gaining more than 7% by midday. Aurora Cannabis wasn't too far behind, with gains on Friday of nearly 6%. The other stocks also moved higher, but by low single-digit percentages.
I think the magnitude of each stock's increase reflects to some degree the anticipated level of commercial success for each respective marijuana grower assuming recreational marijuana is fully legalized later this year. In its last quarter, Canopy Growth reported all-time high medical marijuana revenue -- not just for the company, but for any Canadian marijuana grower. The company should be poised to stand at the top of the recreational marijuana market, too.
Cronos Group had the smallest gain on Friday of any of the five largest Canadian marijuana stocks. I don't think it's coincidental that Cronos also has the lowest annual production capacity of the group.
What's next?
While Canadian marijuana stocks are now a little less risky than they were prior to the Senate vote, the story isn't over yet. The bill now goes to five different Senate committees.
There will almost certainly be plenty of political jockeying in the coming months. Any of the Senate committees could recommend amendments to the original legislation. Ultimately, the bill will come back to the full Senate for more debate and deliberation. A final vote is scheduled for June 7, 2018.
Some senators who are opposed to legalization of recreational marijuana think they'll get more independent senators to vote against the bill. Even the leader of the independent senators' group suspects that some of the group's members who voted for the legislation to advance to committee review will vote against it with the bill's current language.
So there's still a risk that the Senate won't pass recreational marijuana legalization. However, with the margin of victory on Thursday, it appears that the chances of passage are pretty good. But if the Senate passes the bill with amendments, there's yet another hurdle to clear. The bill will have to go back to the House of Commons for a vote.
After passage by both legislative chambers, one final step remains: royal assent. All Canadian legislation must be approved by a representative of the Crown. This is pretty much a ceremonial.
