Cannabis edibles legalization is finally here! On Thursday, Canada finally legalizes cannabis edibles, cannabis-infused beverages, extracts, and other products. What can consumers in Canada expect from legalization? Let’s see!
What’s in store for cannabis edibles legalization?
The first stage of legalization starts on Thursday. Licensed producers can submit their edible and topical products to Health Canada. According to Health Canada’s guidelines, the products will be subject to a 60–90-day approval and procurement process. The long approval process won’t allow products to hit the markets before December.
We’ll have to see which products hit the Canadian market first. Alanna Sokic, a senior consultant for Global Public Affairs, spoke to CTVNews.ca. She said, “As to whether gummies or beverages will come out first, will depend on the focus of individual companies and provinces.”
Quebec’s government is strict when it comes to how cannabis products impact young people. As a result, cannabis edibles like marijuana brownies, chocolate, candy, baked goods, ice cream won’t be available in Quebec.
Cannabis products in the second wave
A Deloitte research report “Nurturing New Growth” discussed how Canadian edibles and alternative cannabis products could generate 2.7 billion Canadian dollars in sales annually. The various edibles products that will hit the market by December are gummies, dissolvable strips, beverages, cookies, brownies, and chocolates. Deloitte’s estimates show that consumers prefer gummies.
Other products include topicals like lotions, balms, oils, concentrates, tinctures (liquid extracts), and capsules.
Health Canada’s suggestions
Health Canada made sure that there are stricter regulations and guidelines for these products. To learn more, read Cannabis 2.0 Legalization: Canada Is Ready.
Health Canada is also concerned about edibles products’ potency. According to Health Canada, the latency period after consuming edibles is longer. The period could range from half an hour to four hours before the effect fully kicks in.
Tilray’s chief marketing officer, Adine Fabiani-Carter discussed the potency effect. She said, “This was the “most profound difference” to other cannabis products. “If you’re not feeling an immediate effect, don’t just consume more.”
The general advice for consumers is to start slow with the new products.
Cannabis players prepare for the new market
While Aurora Cannabis prepares for expansion, analysts are pessimistic about the stock. Analysts think that Hexo accurately senses the political and regulatory environment in Canada. Recently, MKM Partners slashed Aurora Cannabis’s target price by 30% from 5.00 Canadian dollars to 3.5 Canadian dollars.
Currently, cannabis players are having a hard time. Hexo (HEXO) withdrew its fiscal 2020 outlook, which made analysts skeptical about the stock. Many analysts downgraded the stock and cut the target price, which made the stock crash. Hexo and Tilray (TLRY) are both being investigated for violations, which makes matters worse for the sector. Hexo and Tilray stock suffered last week. Read HEXO: The Next Cannabis Player on the Scandal Radar? and Cannabis Scandal Radar: Is Tilray Next? to learn more.
Many analysts expect the cannabis sector’s sales to fall this year. Some brokerage firms reduced cannabis companies’ target prices. To learn more read, Cannabis Stocks in Trouble, PI Financial Cuts Target Price.
Despite the turmoil, the companies are on track with their expansion plans. Even though cannabis players are gearing up for edibles expansion, we’ll likely see results later next year. As a result, we can’t expect profitability to improve right now.
Aphria’s results were a ray of hope
However, Aphria (APHA) reported impressive results for the first quarter of fiscal 2020 on Tuesday. The results were a ray of hope for the cannabis industry. The company reported a positive EBITDA of 1.0 million Canadian dollars. Notably, analysts expected a negative EBITDA. Aphria stock closed with a gain on Tuesday. Aphria expects to post revenues of 650 million–700 million Canadian dollars in fiscal 2020. The company also expects to generate a positive EBITDA. The EBITDA will likely be 88 million–95 Canadian dollars. To learn how Aphria planned for Cannabis 2.0, read Cannabis 2.0: Aphria Gets Ready for Edibles Market.
After trading in the red, Aphria rose 24.5% after the results on Tuesday. The company’s results were a ray of hope for the cannabis sector yesterday. Meanwhile, Canopy Growth, Aurora Cannabis, Cronos Group, Hexo, and Tilray rose 6.5%, 7.1%, 5.7%, 8.4%, and 7.0%, on Tuesday. Hexo and Tilray’s stock prices are finally seeing a positive performance.
What’s happening in the US?
Canada will reap the benefits from the second wave of legalization. Even Mexico is ready to legalize marijuana this month. Federal legalization is still a question in the US. However, more states are stepping up to legalize medical and adult-use marijuana. Pennsylvania just introduced a bill to legalize recreational marijuana. Stay with us for the latest developments in the sector.
A Forbes article discussed how adult-use marijuana can bring in more sales after federal legalization in the US.
Currently, a lot of headwinds challenge legalization in the US. Cannabis corruption and the FBI’s investigation fuel doubts about President Trump’s stance. Read Cannabis Corruption in the US: Trouble before Elections? to learn more.
We hope that the US will learn from Canada’s success. Will marijuana legalization see daylight in the 2020 presidential election?
For more cannabis-related news and updates, visit 420 Investor Daily.