Why Is Marijuana Becoming Legalized And Does It Worth It?

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Canada was the first major country to legalize the use of marijuana for recreational purposes. Previously, only eight states in the U.S., the U.S. District of Columbia and Uruguay did so. Therefore, the decision of the Canadian authorities may be a turning point for the nascent industry if Canada shows the rest of the Western countries that it can be effectively regulated. However, due to the lack of legal suppliers and other difficulties, the black market is unlikely to disappear in the near future.

Position of authorities

Medical use of marijuana became legal in Canada in 2001. Its full legalization was one of the election promises of the current Prime Minister Justin Trudeau in 2015. He argued it was the best way to combat the illegal sale and use of marijuana among youth. But critics have doubts about it. “Given the health risks studied and still unknown, any increase in recreational use of marijuana once it is legalized, whether by adults or young people, will be considered a failure,” says the Canadian Medical Association Journal.

Under the new law, adults will be able to buy marijuana for personal use from authorized vendors and carry around 30 grams of marijuana in public places. To regulate the distribution of marijuana and determine the age from which consumers will be able to buy it, each region of the country will be independent. All legal manufacturers and suppliers must obtain a federal license.

One of the main risks for Canada is the U.S. reaction, where the use, storage and sale of marijuana is prohibited at the federal level. The U.S. Attorney General Jeff Seschns is a long-time critic of marijuana legalization. U.S. Customs and Border Protection on Wednesday warned that Canadians would not be allowed to transport marijuana across borders. It also noted that employees of Canadian marijuana growers may be denied entry to the U.S. if the purpose of the visit is related to their business. But there are several states, where weed is legalized, so you may just visit Thelodgecannabis official website. “They can set their own rules,” acknowledged Canadian Public Security Minister Ralph Goodale, but expressed confidence that U.S. border guards would treat Canadians with respect.

Growing industry

The expectation of legalization of marijuana has affected the financial market of Canada. More than 120 public marijuana growing companies are already operating in the country. But the market is dominated by five companies whose total capitalization has increased from less than $4 billion to more than $40 billion over the past year.

Legalization of marijuana has also attracted the attention of companies from the consumer sector, wishing not to miss a potentially significant trend. American Constellation Brands, which owns the beer brand Corona, last year acquired a 10% stake in one of Canada’s largest marijuana producers, Canopy Growth, and in August invested another $4 billion. It wants to produce beverages with added marijuana. Another brewing company, Molson Coors Brewing, has created a joint venture with Quebec Hexo for the same purpose.

According to the forecasts of the national agency Statistics Canada, spending on buying marijuana in the country will reach 1.34 billion Canadian dollars ($1.03 billion) in the IV quarter of 2020. It also predicts that the number of consumers will exceed 7 million people, about 20% of the country’s population.

Supply problems, limited number of sellers and regional differences in regulation can slow down sales. But a representative of the Ministry of Health said that 66 authorized suppliers of marijuana are ready to ensure the transition of consumers to the legal market.