Oh, Canada. We love you. But, we aren’t loving your delay in legalizing marijuana. Whether or not you were wanting to buy it to smoke, or waiting for legalization to invest, this delay will impact us all. As for those wanting to invest… will the delay really impact us that much?
July 2018 was supposed to be the month for Canadians to be allowed to legally buy recreational marijuana. On Feb. 15, though, health minister Ginette Petitpas Taylor stated that the original target date wasn’t realistic. The problem isn’t at the national level, but instead at the provincial level.
It’s not surprising at all that the stocks of major Canadian marijuana growers sank on this news. Canopy Growth (NYSE:CGC) stock fell nearly 6% on the news of a delay. Aurora Cannabis(NASDAQOTH:ACBFF) and Aphria (NASDAQOTH:APHQF) slipped 7%, while MedReleaf(NASDAQOTH:MEDFF) stock dropped 8%.
Estimates for the Canadian recreational marijuana market have ranged from $4.2 billion to as much as $12 billion annually. At the low end of the range, a one-month delay could mean $350 million in lost sales for the country’s marijuana industry. A worst-case scenario, using the highest projected market size and a lengthier delay, would translate to lost revenue of around $2 billion.
To understand just how serious the delay is, just look at the revenue for the big four marijuana growers over the last 12 months. Combined, Canopy Growth, Aurora, Aphria, and MedReleaf made less than $150 million during the last 12 months. An optimistic cost of the delay reflects more than double the revenue these companies generated during the period.
However… this may be the perfect time for long-term investors to buy! The dip in the market can make you a nice chunk of cash – and fast!