Next year Canada is all set to become the second nation to legalize recreational marijuana. The other country is Uruguay, but Canada will be the first large and industrialized nation to endorse the plant. This is going to have huge implications around the globe. Other nations are not going to idly watch while their tourists reap the benefits of cannabis legalization in Canada. If countries want to remain competitive they have to legalize cannabis so they can make money and see an influx of tourists. Since 2001, Medical marijuana has been legal in Canada and it is certainly no stranger to the cannabis plant. It is actually leading the way for the world to follow.
The Canadian-American Marijuana Relationship
But closer to home, marijuana is going to have an effect on US relations. At present, Canadians can be refused entry and banned from the USA if they admit to smoking marijuana. Even medical marijuana. This has actually happened on a number of situations where Canadians were treated as felons because they legally smoked marijuana in their home country. The situation has received much scorn from Canadian foreign officials who say that this situation should be reconciled. It does seem to be down to the USA to decriminalize marijuana once and for all as it seems to be criminalized for no real purpose. The situation is going to get worse next year when Marijuana is fully legal in Canada, and Canadians will need to remain silent if asked the question by US border officials.
US Marijuana Stocks
One large Toronto based Canadian exchange is considering trading in US marijuana stocks. The news of a foreign company listing US marijuana companies on its exchange is a huge boost for the US marijuana industry as a whole. The more people that are allowed to purchase stocks in marijuana companies the better these companies will do. There will be more invested in the companies and more support.
The parent company of the Toronto Stock Exchange and an umbrella organization of Canadian securities regulators are looking at cannabis companies with U.S. operations—including growers, medical-marijuana distributors and pharmaceutical firms whose products include marijuana ingredients—to determine whether trading in their shares should be allowed to continue on Canadian exchanges.
The regulatory attention comes as the Toronto Stock Exchange and its smaller rival, the Canadian Securities Exchange, have been actively courting marijuana company listings from around the world. At present, roughly half the trading activity on the Canadian Securities Exchange is sourced from marijuana-based businesses, a high-growth sector.
What is very interesting is that US based exchanges cannot list marijuana companies. This means that Canadian residents and exchanges are reaping the benefits of US marijuana companies while US residents and exchanges go without. A supremely idiotic situation from a US point of view, as if the drug was simple decriminalized then the situation would be remedied. Exchanges would be allowed to list such companies and US citizens could invest in them. It is not the fault of US exchanges, they have to comply with the Federal law. It’smore that the law has no foundation, no basis in morality and costs Americans money, wellbeing and peace of mind.
Any action by Canadian regulators is likely to be closely watched by other countries grappling with how to treat the trading and clearing of marijuana stocks. Exchanges in Germany and Israel, for example, two countries that recently legalized medical marijuana and have publicly-listed cannabis firms, have also been weighing listing standards for such companies.
Regulatory Uncertainty
There is a total of 69 listed cannabis related companies in the US, and this number is expected to grow as years go by and the laws and regulations becomes firmly established. This is fantastic news for all American marijuana companies. They can now turn to Canada for Capital. While most institutional investors would never dream of purchasing marijuana stocks, many small businesses and customers would be willing to take a pop. Marijuana companies are currently viewedsimilar to penny stocks and cryptocurrencies. Extremely volatile with quite a lot of regulatory uncertainty. Regulatory uncertainty can kill an entire industry. Just look at China, where they recently banned all cryptocurrency exchanges. The result has been a huge market crash. While the marijuana market is more stable it is definitely not secure. When regulatory frameworks are in place we can expect to see institutional investors loosen the purse strings somewhat. Decriminalizing marijuana at the Federal level would ensure that America remains competitive in the marijuana industry. If it does not, it will simply lose out while other countries capitalize on the laxness of US politicians.
