- - Monday, July 2, 2018

ANALYSIS/OPINION:

Oh, Canada. Land of funny accents, mounted police, and soon, legal marijuana.

The Canadian parliament has made “recreational use” of the weed legal, and Prime Minister Justin Trudeau supports the new law, which legalizes possession of less than an ounce of marijuana for Canadians 18 and older, effective Oct. 17.

“We have seen in the Senate tonight a historic vote that ends 90 years of prohibition of cannabis in this country, 90 years of needless criminalization, 90 years of a just-say-no approach to drugs that hasn’t worked,” Sen. Tony Dean, a sponsor of the legislation, said with considerable glee when the votes were counted.

Canada becomes the second nation to legalize marijuana. “Medical marijuana” has long been legal north of the border. The other is tiny Uruguay. While the Netherlands boasts a thriving marijuana-smoking scene, the weed is technically only decriminalized, not legalized. Amsterdam is lovely though seriously strange, and the stoned tourists who parade through the city center in various streams of consciousness do it no favors. Nine states and the District of Columbia have “legalized” marijuana, but this is a pleasant fiction, much like the fuzzy view of the world through the eyes of a pothead. It’s still against federal law.

Proponents of getting legally stoned, including the prime minister, make the baffling argument that by legalizing marijuana there will be less abuse of it, and fewer young people will light up. “It’s been too easy for our kids to get marijuana,” the prime minister said. “Today, we change that.” But this sounds odd, like distant voices in a pot high. Pot will be much more accessible, and thus prevalent, now that it’s legally sanctioned. A study described in the Journal of American Medicine found that pot smoking among 8th and 10th graders increased in Washington state and Colorado after marijuana got the seal of the law. Legalization does not necessarily mean normalization. Sen. Leo Housakos of Canada’s Conservative Party observes that “we have a bill that has an overarching goal to reduce the marijuana use among young people in this country and what it does right off the get-go is normalizes it.”



Nearly everybody agrees that reducing marijuana smoking, especially among the young, is a good public policy goal. “A growing number of studies show regular marijuana use — once a week or more — actually changes the structure of the teenage brain, specifically in areas dealing with memory and problem solving,” National Public Radio reported in 2014. An Arizona State University researcher reports that “people who began using marijuana in their teenage years and then continued to use marijuana for many years, lost about eight IQ points from childhood to adulthood, whereas those who never used marijuana did not lose any IQ points.” America hardly needs more people with their heads in the clouds of smoke.

The strange gets stranger. As part of the drug legalization, the provinces of Quebec and Ontario want to create marijuana sales monopolies. Quebec has already set up one, the Quebec Cannabis Company. The provincial governments will naturally want to increase the use of marijuana because taxes on it will increase revenue. Even as they work to reduce abuse of the drug on public health grounds, profitability expands when more potheads toke up.

Canada’s cannabis stocks have surged already in anticipation of what happens in October. Matt McCall of the Penn Financial Group is particularly bullish. “I believe the incredible tail winds blowing at legal marijuana’s back make it [much like] the opportunity internet stocks offered in 1994, or the one Bitcoin offered in 1995.”

Marijuana, or cannabis, stocks were among the best-performing shares on the Canadian stock markets last year. Canada’s Global News reports that those who invested in those stocks last year have reaped “bitcoin-like returns.” Canopy, Canada’s largest marijuana producer, saw the value of its shares increase by 7 percent; Cronos Group, another producer, gained 6.2 percent and the worth of Aurora increased nearly 4 percent.

Canadian producers, eager to make a market, expect a surge of profits late this fall when legalization day arrives, but Canadian analysts say there might not be enough pot to go around and some companies won’t be able to meet their commitments. “I think there are companies very well suited to back up what they’re saying,” an analyst at Cacaccord Genuity tells Bloomberg News, “and I think there are some that are just hoping for the best. Allan Gregory, a professor of economics at Canada’s Queen University, says marijuana is not “an investment for the faint of heart.”

There’s peril aplenty for the unwary. Several big American banks declined to do business with banks in Uruguay, which legalized pot five years ago, because they are wary of getting entangled in U.S. banking regulations against money laundering and drug trafficking. One wrong step and everything goes up in the pungent aroma of an innocent joint.

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