In late June 2018, the Canadian Senate overwhelmingly passed Bill C-45, also known as the Cannabis Act, which legalized the use of recreational marijuana.
It’ll legalize the use of marijuana in the country by October 17, 2018.
The legalization of recreational marijuana just in Canada is expected to generate $5 billion in sales. The industry could balloon to $8.7 billion shortly after, as marijuana retail sales just in Canada are likely to surpass beer, wine and spirit sales combined.
However, some analysts believe even those predictions are too low.
In fact, according to Oracle Poll Research, Canada could see more than 11 million marijuana users by 2021 instead of 5.2 million, which could produce between $8 billion and $12 billion in annual sales.
"This is a multibillion-dollar industry going from black to white," says Vahan Ajamian, an analyst with Beacon Securities in Toronto. "It's like the end of alcohol prohibition in the US. It's a once in a generation kind of investment opportunity."
Health Canada estimates demand could reach one million kilograms domestically per year. Meanwhile, production may not be able to produce that much supply by the time recreational marijuana in legalized in October 2018.
By 2021 analysts say Canada could have nearly four million recreational marijuana users, creating a monstrous $4.5 billion industry. The industry could balloon to $8.7 billion shortly after, as marijuana retail sales just in Canada are likely to surpass beer, wine and spirit sales combined. That’s big money.
In short, approval could set off another boom, especially for smart investors.
One of the hottest stocks to keep an eye on is Aphria Inc. (APHQF).
With recent partnerships, supply agreements, and acquisitions, APHQF could become Canada’s third biggest supplier with annual production of 255,000 kilograms.
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Given the expected demand in Canada, the stock could be one of the most explosive.
One of its acquisitions was Nuuvera for $670 million, which will help to expand APHQF’s international presence to 11 countries.
Even more impressive, the company just entered into an agreement with about 1,300 Shopper Drug Marts in Canada to be their licensed medical cannabis supplier.
If the company can continue to progress, the stock could double, if not triple.
To do so, it needs to capture a larger share of the Canadian recreational market, which should begin to happen around October 2018. The company has made big strides to do so. In fact, it’s now moving to increase production capacity. In its fiscal fourth quarter 2018 report, it even noted that expansion efforts to expand from 35,000 kg. to 255,000 kg. next year are on schedule.
It’s also progressing by signing supply agreements for recreational marijuana in seven provinces and territories in Canada.
It also partnered with a leading liquor distributor, to distribute its retail cannabis products.
Even better, it’s branching into cannabis-infused beverages, too. The company recently announced a joint venture with Perennial to develop cannabis-infused products and brands for the Canadian market. Granted, cannabis-infused beverages and edibles will not be legalized in 2018, but regulations for the products could be finalized sometime in 2019.
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