There’s a strong likelihood that Canada’s Cannabis Act will get approved this summer, says GMP Securities’ Martin Landry, who in an update to clients on Tuesday said that Canada’s marijuana stocks should rally on news of the Senate passing Bill C-45, scheduled for third reading on June 7.

Landry says that on Monday, GMP met with representatives from Global Public Affairs, a firm which has been involved in Canada’s emerging cannabis space, who related that there is high likelihood that the Cannabis Act will receive Royal Assent (GPA gave it a roughly 85 per cent chance of success).

“GPA’s view echoes our own opinion that there are limited risks of Bill C-45 derailing at this point,” says Landry. “The Trudeau government has indicated clearly its support for the bill as part of its electoral platform. In addition, the provinces have deployed significant resources to prepare for this change. Hence, we would advise investors to remain invested in the cannabis sector ahead of Bill C-45 getting Royal Assent, as this is likely to be a catalyst the industry has been awaiting for several years.”

The legislative process will see the Senate send the two bills back to the House of Commons to approve a list of amendments, and then, once the amendment process concludes, the legislation will return to the Senate for Royal Assent.

Landry makes note of a number of amendments which may impact how the industry will unfold, including suggested THC limits and a restriction against brand stretching (using cannabis brand elements on promotional items such as clothing). He relates that GPA feels that while THC limits will likely be imposed, there is little risk of them being set so low that they will significantly impact the types of products permitted on the marketplace. As far as brand stretching goes, GPA believes that an amendment with such restrictions is not likely to be adopted by the House of Commons, given that it could be susceptible to free speech-based constitutional challenges.

GPA also related that given the high profile of Bill C-45, MPs and Senators are likely to extend their sessions past the June 29 summer recess date, if it turns out that ironing out the legislation’s amendments takes them past the end of June.

Landry says after the potential catalyst of the June 7 Senate vote, the cannabis sector could enter a brief lull in the summer followed by more upward movement potentially coinciding with the opening of Canada’s rec cannabis market, estimated to commence by late summer.

“In our view, the media attention around the first recreational sales could create excitement providing another positive catalyst for the sector,” says Landry.