On Tuesday, Canada legalized marijuana, becoming the world’s second nation (and the first in the G7) to authorize the sale and use of recreational weed. And cannabis stocks are shooting up on the news.
Marijuana legalization, a key promise of Canadian Prime Minister Justin Trudeau’s administration, will go into effect on October 17, Trudeau announced Wednesday.
Several marijuana company stocks immediately shot up on the news. As of the trading close on Wednesday, prominent cannabis companies traded on the Toronto Stock Exchange, the NYSE, and the NASDAQ had spiked anywhere from 2.4% to 6%.
Six stocks stuck out in particular: Aphria, which rose 4.2%; Canopy Growth spiked 6.4%; GW Pharmaceuticals, which is slated to win the first Food and Drug Administration (FDA) approval of a cannabis-based drug in the U.S. by the end of the month, lifted 2.4%; Vancouver’s Aurora Cannabis was up 4.3%; Cronos Group shot up 5.25%; and MedReleaf was up 3.6%. The North American Marijuana Index, which tracks 41 constituent firms with a current combined market value of more than $36 billion, was up 2.25% on Wednesday.
That’s actually still a dip from the Index’s three-year high at the beginning of 2018. Some investors may be starting to act more cautiously, betting that the true value of these marijuana firms has already been, ahem, baked into their share prices after years of steady progress toward cannabis legalization in both Canada and the U.S.
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