This Fed Announcement Sent Canopy Growth Stock Flying

Dried marijuana and green capsules.
Dried marijuana and green capsules.

How the Canadian Feds Helped Boost Canopy Growth Stock 

Canopy Growth Corp (CVE:CGC, TSE:CGC) got a helping hand from the Canadian federal government on Tuesday as the task force appointed to study the legalization of marijuana released its recommendations.

Canopy Growth stock sparked up by four percent as the task force said that the legal age for pot usage should be 18 and that personal possession should be topped at 30 grams (quite a party, if you ask me).

The findings in the report are non-binding, and the task force advised that provinces should have the flexibility to set their own age and possession limits. These are more like guidelines than strict policy proposals. (Source: “Pot task force recommends legal cannabis sales be limited to users 18 and over,” CBC, December 13, 2016.)

But this was all gold for Canopy Growth stock. The Canadian Medical Association (CMA) had previously recommended an age restriction of 21 and strict limits on quantity and potency until the age of 25. The federal task force figured that the higher the age restriction, the more chance that younger consumers would be driven to the black market. Illegal trade of marijuana is obviously in the crosshairs of the government as a legalization bill is set to be tabled in 2017.

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Of course, just because the bill is going to be tabled for legislation in 2017 doesn’t mean legal weed is just around the corner. The rolling out of the amended laws won’t be as speedy as the the fast food that’s popular with marjiuana smokers.

But the report is still largely roses for Canopy Growth stock. Lower age recommendations will increase the size of the addressable market. Another boon for Canopy Growth stock was the report’s recommendation that the model for medical marijuana be also applied to the cultivation of cannabis for recreational consumption.

All in all, this was a good day for marijuana stocks, including the flagship Canopy Growth stock. The Canadian government report will likely influence policy in 2017 and should provide at least a preview of the framework that legislators will be using when they sit down to draft the regulations on legal pot.