Noah Zivitz

Managing Editor, BNN Bloomberg

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Canada is one step closer to having a legal cannabis market. Senators voted 52-29 yesterday evening to approve Bill C-45 (with two abstentions). Next up, it goes to the Governor General for royal assent, and then the government will decide on a proclamation date when the law will take effect. At this point, the biggest questions surround provincial and municipal preparedness. We’ll explore that - and investment opportunities - today.

Lots of deep dives on the legal market have been published recently. Here are some notable data points:

-CIBC estimates the total legal market will be worth $6.5 billion by 2020 with the potential to yield $1 billion in EBITDA  

-A Deloitte report shows existing cannabis users plan to move 63 per cent of their purchases into the legal realm (Quebec residents being an outlier, at just 47 per cent)  

-The same Deloitte report shows the current average price per gram in the illegal market is $8.24, and users would be willing to pay $8.98 per gram via legal channels (full report)

-The Parliamentary Budget Office estimates Canadians aged 15+ will consume 734 metric tons of cannabis by 2021, and that pot could generate upward of $618 million in tax revenue (PBO’s full 2016 report here)

STOCKS STABILIZE    

In the absence of any new trade war salvos, stocks are steady this morning – but we’ll see how long the peace lasts, with Wilbur Ross testifying about tariffs this morning in D.C. For now, most major European indices are trading ~1 per cent higher and futures are pointing to modest gains at the start of trading in New York. After yesterday’s 67-point loss, the TSX is heading into today’s session 105 points away from an all-time high.  

NOTE: Record intraday high is 16,421.42; record closing high is 16,412.94. Both were set on Jan. 4, 2018. 

LOONIE AT LOWEST IN A YEAR

Nothing new on the tariff front today, but that’s not stopping the loonie from extending its losses. The currency dipped to 75.13 early this morning, its lowest level since June 22, 2017. Trade fears, softening oil prices and less conviction in the market that the Bank of Canada will raise rates next month are all factors. We’ll keep tabs on the dollar’s moves today.

CANADA GOOSE STILL ON A ROLL

GOOS is on an eight-session winning streak on the TSX. Nothing more than an observation, but it begs the question of what an investor should do when a stock runs away from you. Surely, gravity kicks in at some point. Or does it? (Just look a long-term Dollarama chart).

OTHER NOTABLE STORIES

-GE is being booted from the world’s most prestigious stock index. S&P Dow Jones Indices announced late yesterday the giant industrial conglomerate will be replaced on June 26 by Walgreens Boots Alliance, explaining it as a move that will better represent the economy and broader market.

-BMO announced today it’s going to provide $3 billion in capital over the next three years to support female-owned businesses

-Delta Air Lines announced today it has agreed to buy 20 CRJ regional jets from Bombardier. At list price, the order is worth US$961 million.

-Aurora Cannabis is spinning out Australis Capital, which holds the company’s U.S. assets, with the intent of listing shares on the Canadian Securities Exchange

NOTABLE RELEASES/EVENTS

-Notable data: U.S. existing home sales

-9:00 a.m. ET: U.S. Commerce Secretary Wilbur Ross testifies before U.S. Senate Finance Committee (re. Current and Proposed Tariff Actions Administered by the Department of Commerce)

-9:30 a.m. ET: Health Minister Ginette Petitpas Taylor, Justice Minister Jody Wilson-Raybould and Parliamentary Secretary Bill Blair hold media avail on Bill C-45 in House of Commons Foyer

-10:00 a.m. ET: BlackBerry holds annual meeting in Waterloo

-12:00 p.m. ET: Alberta Finance Minister Joe Ceci holds media avail in Edmonton to discuss priorities for upcoming finance ministers’ meeting

-12:00 p.m. ET: Foreign Affairs Minister Chrystia Freeland delivers remarks at Montreal Council on Foreign Relations

-12:30 p.m. ET: Finance Minister Bill Morneau speaks before House Finance Committee (re. Statutory Review of the Proceeds of Crime and Terrorist Financing Act)

-2:00 p.m. ET: Freeland holds media avail in Montreal

-4:30 p.m. ET: Prime Minister Justin Trudeau holds media avail In Ottawa at National Press Theatre

-7:30 p.m. ET: U.S. President Donald Trump holds Make America Great Again rally in Duluth, Minnesota

-Ultra-low cost carrier Swoop launches

-U.S. Commerce Department's Select USA investment begins (runs to June 22)

-Delegation of female Canadian business leaders in Detroit for Women's Business Enterprise National Council Conference

-OPEC holds two-day international seminar in Vienna

Every morning BNN's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.