Marijuana sales officially began in Canada on Wednesday, making it the first G7 country — and the second country in the world after Uruguay — to legalize the drug for all adults.
Prime Minister Justin Trudeau campaigned on a promise to legalize marijuana, and his Liberal government delivered in the form of Bill C-45, otherwise known as the Cannabis Act.
While Trudeau cast the bill in a public health lens, in order to make marijuana more difficult for teenagers to access and erode black market profits, the global financial community is eagerly looking at Canada to see how legalization plays out.
The bill legalizes marijuana but leaves it up to each province to set age limits and decide how to sell it. Some provinces, like Ontario — Canada's most populous province and financial center — won't have open storefronts on Wednesday.
Until Ontario's Conservative government works out the kinks in its plan to open up the market to private retailers, Ontarians will be able to purchase cannabis online.
Other provinces, like Alberta, will have cannabis available in provincially-run stores on Wednesday for all adults over the age of 18. Quebec, on the other hand, is planning to raise the age limit to 21. And, all provinces will only have marijuana flower available.
Vaporizers, edibles, and marijuana-infused beverages are expected to be made legal sometime next year.
'A bold and principled step'
Legalization advocates around the world cheered Canada's move.
"Canada’s move to legalize marijuana is a historic rebuke to the disastrous global war on drugs, which has ruined millions of lives," Hannah Hetzer, a Senior International Policy Manager at the pro-legalization Drug Policy Alliance, said. "Many countries are searching for innovative approaches to drug policy that emphasize health and rights, rather than repression. By taking this bold and principled step, Canada will likely become an inspiration for many other countries."
Financial markets and investors are looking to Canada as a bellwether to see how other countries will legalize the drug — and where lucrative opportunities may lie.
"We believe that the legalization in Canada offers a roadmap to invest in the companies that will form the basis of the legal cannabis industry in the coming years," Jon Trauben, a managing partner at the cannabis-focused Altitude Investment Management, said.
Canada's federally coherent regulations will give investors and businesses in the cannabis industry access to banking, public markets, and the ability to sponsor pharmaceutical research and publish papers — just like in any other industry.
Canada's cannabis stocks have been frothy in the run-up to legalization.
In the US, it's a different ballgame. The patchwork approach to legalization means many cannabis businesses, which are legal in the states they operate, are denied access to the banking system, aren't able to get loans, and can't list on US stock exchanges like the NASDAQ or NYSE.
Researchers in the US also aren't easily able to study cannabis for medical purposes because the plant is federally illegal.
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Canada's biggest cannabis companies are scaling up and signing deals in preparation
For now, Canada's biggest cannabis producers are rapidly scaling up and signing deals to capitalize on the fervor around legalization.
Constellation, the third-largest beer company in the US, paid $4 billion in August for a 38% stake of Canopy Growth, the largest publicly traded marijuana grower, to develop marijuana-infused beverages and other products. It's the largest corporate investment in a marijuana cultivator to date.
Other big retail companies, like Walmart, have signaled they are exploring the market for CBD (cannabidiol) products. CBD is a non-psychoactive component of marijuana that's linked to a range of health benefits but can't get you high.
While Canada's marijuana legalization is a massive opportunity for investors and cannabis companies, the true value, according to some, is in the pressure it puts on the US to reform marijuana laws.
"Canada has this big finger that is wagging, that is pointing down to us in the US saying, 'How come you can't get your stuff together?" Adam Bierman, the CEO MedMen, the largest US cannabis retailer, told Business Insider in an interview.
And while Canada may ultimately be a smaller marijuana market than California — the bank CIBC predicts it will become a $5 billion industry in the country by 2020 — the symbolism of being the first G7 country to legalize the plant means the whole world is watching.
"Canada has been so much more visionary, so much more progressive, and so much more reflective of the public sentiment in 2018 than the US has," Bierman said.