Marijuana stocks rose on Thursday after lawmakers in Mexico the day before proposed a bill that would legalize marijuana, while a subsidiary of British American Tobacco (BTI) planned to have a large stake in Canadian marijuana producer Organigram (OGI).
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In Mexico, the Chamber of Deputies, the country’s lower house, approved a broad version of the bill in a vote of 316-129 and then began to debate the details, according to several media reports. However, the bill is expected to pass the Senate and become law.
The bill would allow adults to buy and consume cannabis and grow a handful of plants. The law would also create a licensing system for companies and farmers to produce and sell cannabis products.
Marijuana stocks increased earlier this year as the momentum gained momentum for US legalization. Since then, these stocks have given up on their earnings.
Even if the US and Mexico legalized, it is unclear how much international trade laws would allow international sales. And any marijuana producer entering a new nation would face challenges in building infrastructure to grow and sell cannabis.
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Legalization of other nations
Canada and Uruguay have already legalized recreational marijuana. But Mexico would be the largest legal cannabis market to date, with its population of around 130 million.
More nations around the world have also begun to legalize medical use. In the United States, Virginia last month became the 16th state to approve recreational legalization. Sales in the state are scheduled to begin in 2024.
Mexico’s legalization would come after years of violence by the drug cartel in the country. As the New York Times noted, legalization is unlikely to significantly repress this violence as cartels start selling other drugs. In the United States, some police said, much of the illegal supply comes from California.
The project aims to prioritize smaller farmers in the licensing process, the Times said. But he said the benefit for them was also uncertain.
When Colombia legalized medical marijuana several years ago – in part to keep small farmers and indigenous communities out of the illegal drug trade – observers expressed concern about farmers’ ability to participate fully in an industry at the risk of being managed by large operators.
Most marijuana stocks go up
Among Canadian marijuana stocks, Canopy growth (CGC) rose 7.4% on the stock market today. Tilray (TLRY) jumped 17%. Aphria (APHA) won 12%. Tilray and Aphria plan to merge.
Cronos Group (CRON) gained 7.7%. Aurora Cannabis (ACB) rose 7.5%.
Among U.S. marijuana stocks that are sold over-the-counter and in Canada, Curaleaf (OTC: CURLF) fell 0.1%. Cresco Labs (OTC: CRLBF) increased by 4.4%. Acreage Holdings (OTC: ACRHF) increased by 0.8%.
Organizational Chart Lands Tobacco Investment
Meanwhile, Organigram said a British American Tobacco subsidiary will invest $ 175.6 million in the company for a 19.9% stake.
Under the agreement, companies will establish a “Center of Excellence”, located at an Organigram in-house facility in New Brunswick, Canada, which will focus on the development of cannabis products. The initial focus of this effort will be on CBD, the non-psychoactive compound found in cannabis plants.
Tobacco giant Altria (MO), at the end of 2018, announced plans to acquire a large stake in the Cronos Group. However, some analysts said the results of that deal were slow to materialize.
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