Tilray's product line of capsules, oils, and dried marijuana are shown at head office in Nanaimo, B.C., on November 29, 2017. (CP/Chad Hipolito)

Tilray turmoil in the markets over cannabis stocks

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Tilray Inc., the Nanaimo, British Columbia-based cannabis company, is on the verge of becoming a household name, certainly in Canada, where the coming legalization of cannabis is a major societal and business shift.

Wednesday October 17, 2018

Cannabis was added to the “Restricted List” in 1923. It wasn’t very popular with Canadians until the 1960’s.

Arrests for possession of cannabis grew progressively and the federal government responded in 1969 with an inquiry known as the LeDain Commission.

In its report in 1972, the commissioners recommended dropping criminal penalties for cannabis possession, though not legalization. The recommendations were ignored.

Since then, cannabis use, and activism continued to grow. The annual global event known as 4/20, gave many younger Canadians a platform for their demands for change.

Tilray is the latest cannabis company to take the market by storm in 2018.. In this April 20, 2015 file photo, a Canadian flag with a cannabis leaf flies on Parliament Hill during a 4/20 demonstration event in Ottawa, Ontario. (Adrian Wyld/ CP via AP, File)

During the 2015 federal election campaign, Liberal leader, Justin Trudeau made legalization of cannabis part of his platform. The party was elected in October with a comfortable majority by one of the best voter turnouts in twenty-five years.

Uruguay was the first country to legalize cannabis in 2013. Various other countries and American states have a variety of liberalized laws, but Canada is only the second country to legalize and open up the cannabis industry and the market.

Wednesday October 17, 2018 is the day that legal sales for recreational and medicinal use, begin in Canada. Medicinal use under certain circumstances has been allowed for some time.

Several companies have emerged and dominated the market, such as Canopy Growth, Aphria and Aurora. And now there’s Tilray.

“In one month, Tilray stock has gained 645 per cent”

A major Canadian grower, processor and distributor, Tilray completed an initial public stock offering in the United States, raising $153 million (U.S). The shares began trading on July 19, 2018, on the Nasdaq stock exchange, priced initially at $17, and quickly jumped to more than $21 dollars.

That was then: this week Tilray dominated the headlines with spikes of up to $238 dollars.

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David Blair, CBC Radio’s national business reporter, has been watching the frenzy and explains what caused the latest spike.

“The U.S. Drug Enforcement Administration approved Tilray’s cannabis for use on trials for neurological disorders, so that means that the Canadian product would be shipped into the United States, they’re going to do some clinical trials and then of course that could open up the door for regular use and regular shipments of this Canadian-grown cannabis for medical purposes in the United States.”

David Blair provides one of his favourite metrics: “In one month, Tilray stock has gained 645 per cent.”

“People are looking to Canada because of the potential growth for recreational marijuana as well as for medical marijuana and as a result people are buying into the stock and that’s what’s pushing this so much higher.”

“This is a brand new industry” Blair says and it’s rare, from a business standpoint, that one gets to watch a business or indeed and industry, get carved out.

The tech industry was a relatively new industry once and there were a lot of losers when the bubble burst, but despite the comparisons, people continue to invest.

There are several naysayers however, like celebrity stock picker Jim Cramer. “Please don’t buy” he says.

There are a lot of kinks to be ironed out in the next year, David Blair says. Differing distribution systems in all of Canada’s 10 provinces and three territories will be a challenge, as will the evolution of law enforcement.

And then there’s the new uncertainty when crossing the border into the United States. U.S. border officers are able to bar Canadians for life, for even working for one of these cannabic companies.

In the meantime, the countdown is on, and Canadians are ready.

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One comment on “Tilray turmoil in the markets over cannabis stocks
  1. Peter Ashcroft says:

    What needs to be monitored is the possible medical needs of overdosed cannabis recreational drug users