TORONTO, June 20 (Reuters) - Canadian marijuana stocks rose on Wednesday after the country became the first major economy to legalize its recreational use, but earlier rallies in anticipation of victory in the key upper house vote muted some post-approval gains in the sector.
Canada’s Senate voted 52-29 on Tuesday in favor of a revised bill from the elected House of Commons, paving the way for a fully legal cannabis market within eight-to-12 weeks following a final sign-off from the country’s governor general in the next few days.
“The legislation... marks a wholesale shift in how our country approaches cannabis,” Jody Wilson-Raybould, minister of justice and attorney general of Canada told reporters on Wednesday. “It leaves behind a failed model of prohibition, a model that has made organized crime rich and left our young people vulnerable.”
Shares of Canopy Growth Corp, Canada’s biggest marijuana producer by market value, jumped as much as 6 percent to a new high, before giving back most of those gains.
Aurora Cannabis Inc and Aphria Inc, the second- and third-biggest producers, climbed as much as 6.4 percent and 4.6 percent, respectively, in early trade before moderating gains.
The Horizons Marijuana Life Sciences ETF had soared 143 percent since its April 2017 inception to a January peak, but has since retreated 25 percent from there. On Wednesday, it climbed as much as 3.9 percent and was trading 1.7 percent higher at C$19.27.
“Most of the buying was done ahead of time,” said Jason Zandberg, research analyst at PI Financial. “If an event is built in and there’s no follow-on catalyst they tend to sell off on the news. This is all very positive.”
Canadian cannabis producers have been an investor favorite ahead of the country’s plan to legalize recreational marijuana use, as well as some international appovals of medical cannabis. Some gains have moderated recently over concerns they had become overvalued, delays to legislation that was originally expected to take effect by July, and strict rules around supply and branding.
“This is a historic milestone for our industry and for our country ... as Canada solidifies its progressive leadership on cannabis,” Vic Neufeld, chief executive officer of Aphria said in an e-mailed statement.
But not all are cheering the broad legalization. More than half of Canadian employers are worried about its potential impact on their workplaces, according to a report by the Conference Board of Canada. Their biggest concerns include safety, impairment and increased use of marijuana by employees, the report found. (C$1 = 75 U.S. cents) (Reporting by Nichola Saminather; additional reporting by Danya Hajjaji; editing by Bill Berkrot)