Canada is one of two countries that have legalized cannabis for adult use. The other country is Uruguay.
Unlike Uruguay, Canada’s legalization model allows sales to tourists. Canada is also home to a thriving cannabis export market.
As the only G-7 country to legalize cannabis for adult use, Canada has been closely watched by cannabis investors around the world.
Many Canadian cannabis companies offer shares, and some did so before legalization in 2018. Did legalization help those actions?
Post-legalization of Canadian actions
A team of researchers in Canada and China have recently joined forces to examine the effect of, if any, the legalization of cannabis on cannabis stock prices in Canada.
It is a common assumption that national legalization provided a major boost to cannabis stock prices, but it is a hypothesis that has not been investigated so far.
The study explored data on the prices of ten cannabis stocks in Canada between 2015 and 2020. Before 2018, companies focused on medical cannabis and, after legalization, made the transition to a certain level. point to the adult– use of industry.
“The results of the comparative analysis indicate that the performance of the matching couples is largely correlated with time. In addition, the pre-legalization performance of cannabis companies was better than their post-legalization performance. “. the researchers stated.
“Given that cannabis companies did not outperform their peers, we can confirm that legalization did not have a significant positive effect on the industry. We can also infer that, from a stock market perspective, the legalization of recreational cannabis did not it has been successful so far, “the researchers concluded.
Measure legalization beyond stock prices
As the researchers pointed out, the legalization of adult cannabis has not been successful from a stock market perspective, at least from a stock market perspective. companies involved in the study.
However, this is a very limited measure of the success or failure of this when it comes to legalization in Canada.
The legalization of cannabis has been a great success from the point of view of consumers and patients who previously faced harsh penalties due to cannabis.
It is also a great success from the perspective of local governments and taxpayers who no longer have to waste public resources on a failed public policy.
The legalization of cannabis in Canada is not perfect and still needs to be improved, but it is much better than a total ban, and this will also be the case in other countries that legalize cannabis in the future.