The cannabis market has come a long way in recent years. While marijuana is still considered a Schedule 1 drug under the Controlled Substances Act, the US has allowed patients with a variety of medical conditions to smoke marijuana in 23 states since 1996, and more states have moved to legalize both medical and recreational cannabis.
Alaska became the third state to allow individuals to grow, smoke and possess cannabis for recreational use, while Oregon became the fourth in July 2015. There have also been initiatives in the medical cannabis space, with both Texas and Georgia signing bills last year to legalize low-THC cannabis oil for the treatment of epilepsy and other chronic diseases.
Up north, Canada’s cannabis market had a major win in 2015 when the Liberal government won the federal election on October 19, 2015. Since the start of his electoral campaign, Justin Trudeau, the country’s elected prime minister, has made it clear that he will make legalizing marijuana across Canada a priority — he told CTV News that, if elected, he would begin working to regulate and legalize marijuana “right away.”
Canadian election results boost cannabis market
Unsurprisingly, many Canadian cannabis stocks reacted favorably to Trudeau’s election, with gainers including Canopy Growth (TSXV:CGC), an authorized licensed producer under Health Canada’s Marihuana for Medical Purposes Regulations. Canopy CEO Bruce Linton told the Investing News Network (INN) that the election was an important milestone for the industry as it’s put legalization front and center and created dialogue about the fact that cannabis is a commonplace product.
Canopy’s share price surpassed the $2 mark around the time of the election and has continued to increase. “Within a week or so of the election, we traded up as high as $3.65, which took our market cap in excess of $300 million. It has drifted down a little bit, but we are still north of a $200-million market cap and trading huge volumes,” Linton said. “It is a highly liquid stock in part because there has been a lot more focus on the stock given the election. That whole campaign and the conclusion of it really did put a platform in place for our next two or three years.”
The company has also seen massive growth in 2015 overall. Prior the the election, Canopy, formerly known as Tweed Marijuana, acquired Bedrocan Cannabis in an all-stock transaction. At the same time, the company announced Q1 revenues of $1.7 million, the first publicly announced million-dollar quarter in the sector.
“Having the two dominant brands that defined who we were when the election occurred, there is a reason our companies had the primary trade, and it is because we have the best medical position and the best recreational position,” Linton said.
Canopy reported revenues of $7.0 million, a 300 percent increase over the three months ended June 30, 2015 and a 39 percent increase over fourth quarter fiscal year 2016.