Canada: Justin Trudeau's election boosts medical cannabis prices

Among the big winners of Justin Trudeau's surprise election last weekend in Canada, the‘Canada's cannabis industry.

Shares of Canadian companies specializing in the production and sale of medical marijuana surged 5 to 10% on the Toronto Stock Exchange, reacting to candidate Trudeau's campaign promise to legalize cannabis in Canada if elected, as a fine foil to the statements of the opposing candidate Stephen Harper.

One of the big players in the Canadian cannabis market, Canopy Growth Corp, saw its share price rise to 21% at the opening of trading on Tuesday morning. Shares in the company, which owns the Tweed and Debrocan brands, had already risen by 29% the previous week.

Bruce Linton, CEO of Canopy Growth, which supplies nearly 20% of medical cannabis users in Canada, testifies, «I think what you'll probably see, after this election, is a recognition of the opportunity to collect taxes on something that's already being sold illegally or illicitly.»

Legalizing cannabis in Canada was a key element of Trudeau's campaign, during which he promised to work for legalization «the right way». Trudeau said, during the final moments of Monday's vote, «We don't know yet what rate marijuana will be taxed at, how we're going to control the market, or if it will happen in the next few months, during the first year or if it will take a year or two to launch.».

The legalization and regulation of cannabis in Canada should be modeled on Colorado or Oregon. Justin Trudeau had argued that this was the easiest way to prevent children from accessing the substance and boost state finances.

Legalization would lead to significant growth in cannabis sales. The Liberals had already tried to legalize marijuana in the 2000s, but turned back under pressure from the United States. Now that half of the US states have at least legalized medical marijuana, the situation is clearly going to change.

An estimated 1 million Canadians (out of 35) smoke cannabis regularly. If Trudeau keeps his promises, Canada would become the second country after Uruguay to legalize the cultivation, sale and recreational use of cannabis.