The analysts expect 'meaningful legal recreational sales' to roll-out on a national level by September/October.

Analysts at Canaccord Genuity hailed the Canadian Senate’s decision Thursday to legalize recreational marijuana as a “watershed moment” and they expect cannabis to go on sale by September or October.

However, the analysts pointed out that there were several logistical hurdles because new retail systems needed time to launch successfully.

The Canadian Senate voted Thursday to pass Bill C-45 — the landmark legislation to legalize recreational marijuana — by a vote of 56 to 30, with one abstention. The bill also included amendments that the House of Commons will need to decide on before the law can be passed.

Amendments likely procedural in nature

“The official legalization of recreational cannabis in Canada has effectively reached the finish line; however, the amendments made to the Bill in the interim will have to be approved in the House of Commons and then ratified by the Senate,” wrote Canaccord Genuity analysts Matt Bottomley, Neil Maruoka, Jenny Wang and Nick Warner.

“We expect this remaining process to be procedural in nature and likely completed in the coming week,” they added.

Canada is set to become the first "major country" in the world to approve adult-use cannabis at the federal level. “As a result, we believe Canada will continue to be a global leader in cannabis regulation, infrastructure, expertise/knowledge and access to capital,” wrote the analysts.

Sales roll-out on a national level by September/October

While there is not yet a defined date when recreational marijuana will go on sale, clearing the Senate appeared to be the last serious hurdle for the bill, with a number of Conservative senators opposing legalization.

The analysts noted that looking ahead, provinces will continue to finalize respective distribution platforms.

“We expect meaningful legal rec sales to roll-out on a national level by September/October,” wrote the analysts.“However, we caution investors that there remain several issues to be ironed out, and it is not likely that the launch will be smooth given challenges for retail distribution and ramping up cultivation capacity.”

Positive catalysts  

Despite logistical hurdles, the analysts believe “positive industry catalysts” are still on the horizon.

“This includes major provinces such as Ontario, Alberta and BC still to announce initial tender allotments for product and the legislation of more recreational friendly products, such as vape pens, edibles and other derivative cannabis product that will become increasingly important for producers as the cultivation of cannabis is expected to become largely commoditized,” wrote the analysts.

According to The Independent, Canada's most populous province plans 40 government-run stores at first, rising to 150 by 2020. It said Quebec, the second largest, will start with 20 stores but has deferred any expansion plans.

“By contrast, the US state of Colorado is now home to around 1,000 marijuana retailers after legalising the drug in 2012,” pointed out the newspaper.