The Canadian senate will on Thursday vote on a bill that would make the country the first G20 state to legalize recreational marijuana. The senate is expected to ratify Bill C-45.
There is as yet only one country where recreational weed is fully legal—Uruguay, although foreigners there aren’t supposed to buy it. The flower is partially or fully decriminalized in some countries, such as Spain and Switzerland, and many U.S. states now allow recreational use, but Canada would become the first of the world’s wealthiest countries to give its commercial sale the green light across the board.
The move should create a national testbed that will help answer questions about effects on public health and the black market.
However, it will also provide lift-off for a growing industry in a way that hasn’t even been possible south of the border—the continuing federal ban in the U.S. means companies can’t transport their wares across state lines, and often have trouble banking their takings.
The Canadian weed business has recently seen massive M&A in anticipation of legalization, with the big beasts to watch being Aurora Cannabis, Canopy Growth and Aphria.
Last month, Aurora agreed to buy rival MedReleaf for $2.2 billion in stock. Aurora, which wants to “become nothing less than the world’s largest cannabis company,” earlier that month also snapped up CanniMed in a $598 million cash-and-stock deal.
Again in May, Canopy Growth—Canada’s largest licensed cannabis producer, which is aiming for a New York Stock Exchange listing—bought out greenhouse operator BC Tweed Joint Venture for $289 million in shares. And in March, Aphria bought out Nuuvera for $670 million.
Canada will control marijuana sales quite tightly—the product will have to be sold in plain packaging and prices will be capped in order to drive out the black market—but there is big money to be made. The investment bank Cannacord Genuity reckons legalization will enable sales of $4.6 billion by 2021.