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10/16/2018 12:51 EDT | Updated 10/16/2018 12:52 EDT

Canada Has Smoked The World Cannabis Market With Legalization

Canadians can expect to have access to the highest quality, purest form of cannabis on the market anywhere in the world.

On October 17, cannabis prohibition ends in Canada, as it becomes the first G7 nation to fully legalize adult use of recreational and medical cannabis.

Most of the news stories will likely focus on Canadians lighting up legally for the first time. But through that haze, the real story is that a sophisticated, safe and world leading new industry is emerging.

Patrick Doyle / Reuters
A protest for the legalization of marijuana on Parliament Hill in Ottawa on April 20, 2012.

When Canadian Prime Minister Justin Trudeau made adult-use recreational cannabis legalization part of his 2015 election campaign platform, he did so for two primary purposes: to keep illegal cannabis out of the hands of young people and to drive out the illegal cannabis trade.

Canada will hold this leading position in the worldwide cannabis industry until, or unless, the United States changes its attitude and policies around cannabis, which appears to be unlikely.

Here's why that is great for Canada, and equally bad for the U.S.

Canadians Have Access to Capital

Canadian cannabis companies have access to capital markets. Initially, Canadian companies went public on their own stock exchanges and were able to trading on both the TSX and CSE.

As these companies grew, several co-listed on NASDAQ and the NYSE. The Canadian exchanges are increasingly attracting large, multi-state cannabis operators from the U.S., furthering Canada's lead position as the global hub of cannabis finance. Expect this trend to continue and grow in the months and years ahead.

Canadians Have Access to World Markets

Canadian producers are becoming a world-supplier of cannabis. It's not uncommon for Canadian companies to be supplying medical cannabis markets around the world. Germany, Denmark and Australia are all importing Canadian cannabis.

This approach sets Canadian cannabis apart from the rest of the world.

Because of Canada's national approach, a robust and legal export market has developed from Canadian cannabis companies, putting funds accessed in capital markets to use furthering Canada's cannabis lead. It doesn't hurt that Canadian cannabis companies are also getting Trudeau's halo brand boost.

Canadians Have Quality Assurance

Canada's approach to cannabis is highly regulated from a central government authority: Health Canada.

Health Canada's approach to regulations is to have strict quality assurance practices adhered to from product testing to physical security of cannabis growth and production facilities to pesticide and herbicide management.Canada is producing cannabis to the highest of world standards.

This approach sets Canadian cannabis apart from the rest of the world. In fact, for the first time ever, the U.S. Drug Enforcement Agency recently approved imports from Canadian producers, Tilray and Canopy Growth, into the U.S. for research.

MARTIN OUELLET-DIOTTE via Getty Images
Cannabis items for sale in a government-owned store in Montreal on Oct. 16, 2018.

A Canadian Foundation for Research

Because of nearly 100 years of prohibition of cannabis, researchers are still catching up to the medical potential of cannabis. But with legalized cannabis in Canada, the country is well poised to outpace the U.S. on this front too, because nearly all of cannabis products are still considered Schedule 1 narcotics there, meaning they are deemed to have no medical benefit.

The criminal classification of cannabis means that both research dollars and samples were exceedingly difficult to come by, and as a result, third-party academic research is in short supply in the U.S., which is why U.S. researchers are importing from Canada.

However, as Canada ushers in full legalization, I expect world class research and innovations from companies, brands and universities across the country.

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While the current focus may be on the adult-use recreational cannabis market domestically and internationally, the larger worldwide market for Canadian companies will be in the market of derived products in the health and wellness space. As Canadian companies invest in the research and development to make this happen, expect Canadian company's lead over their U.S. counterparts to expand.

Canadian cannabis companies are partnering with pharmaceutical and nutraceutical companies to create the formulations and products that will line pharmacy and over-the-counter shelves of the future. This type of long-term, capital-intensive research and development is only possible through a national, well-capitalized approach to cannabis, like Canada's.

It's important to remember that along with the end of prohibition, Canadians will also be celebrating its commanding lead in the ever-expanding world cannabis market. And as Canadian companies expand their lead in the cannabis sector, Canadians can expect to have access to the highest quality, purest form of cannabis on the market anywhere in the world, and with that, health, wellness and recreational benefits as well.

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