Weed stocks: Canada becomes 2nd country to legalize marijuana

A
budtender at a medical-marijuana dispensary in Los Angeles in
2012.
David
McNew/Getty

• Canada on Wednesday became the second country to officially
  legalize marijuana.
• Marijuana stocks were trading down by 2% to 7% ahead of the
  opening bell.
• Watch Canopy
  Growth, Tilray,
  and Cronos
  trade in real time.

Weed stocks were set to slide at Wednesday’s opening bell after

Canada become the second country to officially legalize
marijuana. Three of the largest marijuana producers by market
cap — Canopy
Growth, Tilray,
and Cronos
— were trading down by 2% to 7%.

Here’s the scoreboard:

On Wednesday, Canada became the first G7 country — and second
country in the world after Uruguay — to legalize marijuana for
all adults. Each Canadian province has set its own age limit and
rules on how to sell the drug — with some opting for storefronts
and others pushing business online.

And while many Canadians may be celebrating their ability to
freely use the drug, the coming legalization had been a boon for
producers operating in the country as their market values
exploded amid increasing interest from investors.

Canopy Growth, for example, has seen its market capitalization
grow 128% to $12.2 billion after Constellation Brands — the
beverage giant behind Corona beer and Svedka vodka — announced a

$4 billion investment. Its rival Tilray has seen its market
value explode by 555% over that time after making various supply
deals.

On Tuesday, analysts at Benchmark said Canada’s recreational
cannabis market could reach 10.5 billion Canadian dollars by 2023
and suggested that Tilray would continue to lead the pack.

“We expect Tilray to acquire a meaningful share of the Canadian
cannabis market based on initial supply agreements and through
its first mover advantage in building production scale and
strengthening national brands and products across a broad and
expanding category,” the analyst Mike Hickey said. He has a $200
price target for the stock — 26% above where shares settled
Tuesday.

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