Foreign companies eyeing Australia's cannabis sector as Canberra becomes first city to legalize recreational marijuana use

Australia’s capital Canberra became the first city Down Under to legalize recreational marijuana on Wednesday.

Legislators in the Australian Capital Territory (ACT) passed a bill allowing people aged 18 or over to possess up to 50 grams per person of cannabis and a maximum of four plants per household for personal consumption.

The new law is expected to come into effect at the end of January 2020.

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The landmark legalization suggests that the tide may be turning in Australia, where recreational cannabis remains a prohibited substance under federal law.

In a report released by the ACT government last week, legislators warned that possessing and growing cannabis will carry a degree of risk arising from interactions between territory and Commonwealth law.

“We believe the ACT is able and entitled to make our own laws on this matter,” the report noted. “However, we would be the first jurisdiction in Australia to legislate in this way, and the interaction with existing Commonwealth law remains untested.”

The state government said that it cannot guarantee the Commonwealth government would not intervene to prevent reforms, as it has in the past with other controversial bills such as same-sex marriage.

Eyes on Australia

Foreign investors are closely watching events unfold on the continent as a number of North American-listed companies have significant assets in Australia.

Tilray Inc (NASDAQ:TLRY) is a major player in the medical cannabis space in Australia and New Zealand, where medicinal marijuana products are regulated as controlled drugs.

Priavtely-owned Asterion Cannabis Inc is also constructing a massive purpose-built greenhouse cannabis production facility in Queensland, Australia.

The facility will be home to the world’s largest greenhouse cannabis operation, covering a 4.3 million square foot site (approximately 99 acres).

Meanwhile, Toronto-based producer The Flowr Corporation (CVE:FLWR) (OTCMKTS:FLWPF) just closed a deal to acquire a 100% interest in medical cannabis producer Holigen, which has an interest in GMP-licensed medicinal cannabis company TCann, based in Sydney.

While it is important to note that the aforementioned companies primarily operate in the medical cannabis space, Wednesday’s ruling could be a sign of things to come for the rest of Australia.

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

Story by ProactiveInvestors