The U.S. election opened a small but noteworthy gap between Canadian and U.S. cannabis companies last week, underscoring all of the unanswered questions that investors face as access to pot spreads across the world’s largest economy.
New Jersey, Arizona, South Dakota and Montana voted to legalize recreational use last week, while Mississippi and South Dakota will allow medical marijuana. This puts about 21 million more Americans in the reach of cannabis products — more than half Canada’s total population of 38 million.
While growth in a neighboring market might seem to be a good sign for Canada’s cannabis industry, the biggest Canadian producers plunged early on Nov. 4 in their first trading after the election. They rebounded later in the week — in part on the prospect of legalization in New York state and changing sentiments. But the divergence, even if it was a blip, sparked discussions about how much Canada could benefit from the “green rush” south of the border.
Beyond the obvious questions surrounding marijuana’s legality — it remains federally illegal in the U.S. — there’s also the central issue of whether the U.S. would open its market up to competition. [Read more at Bloomberg]