Panic in the Canadian cannabis industry

On Tuesday evening, Bill Blair, Toronto's police chief and the city's cannabis legalization envoy, said on Bloomberg TV that the The Canadian government will take its time regarding the legalization of cannabis. This statement sent a wave of panic through the cannabis financial markets.

Legalization Is Not Yet Ready

«We’ll take as much time as it takes to get this right. If the law is scheduled for spring, we still have a lot of work to do to make sure it’s complete. We won’t rush into something like this just to meet a deadline.» For now, Bill Blair says the government is working with the provinces to establish an appropriate regulatory framework.

These comments caught investors and speculators in the cannabis industry off guard. They had all been betting on legalization taking effect sometime in 2017. As a result, companies such as Canopy Growth or Aurora Cannabis saw their stock price rise steadily—until this Wednesday. According to financial analyst Chris Damas: «If there’s a delay, we’re going to have a lot of trouble on our hands. Companies looking to transition from medical to recreational use have already laid the groundwork; there could be a massive surplus of recreational cannabis inventory if the government doesn’t stay on schedule.».

Nerves on Edge

In two days, the stock prices of the major publicly traded Canadian cannabis companies All of them lost between 6.7 and 18 % of their value. This slump was particularly noticeable at Canopy Growth, where the stock fell from $11.8 to $9.8 on Thursday morning. Fortunately for traders and investors, speculative trading picked up again in the afternoon, and as of this writing, the stock is hovering around 11$.

Aurora Cannabis Stock Performance Over the Last Five Days

Between an unpredictable Trump on the issue of cannabis and a Canadian government that is taking its time on the legalization of recreational cannabis, it will be a long year for investors in the legal cannabis industry.