Shares of marijuana companies rise with release of recreational use recommendations

Publicly traded stocks of Canadian marijuana companies headed higher Tuesday after a federal task force issued recommendations on the sale of recreational pot.

On the TSX, shares of Canada's largest producer, Canopy Growth the first pot company with a market capitalization above $1 billion rose 79cents, or 7.9 per cent, to close at $10.79, its high for the day..

Among the smaller companies, Emerald Health Therapeutics shares rose15 cents, or 12 per cent,to reach $1.40on the TSX Venture Exchange.

• Pot task force recommends legal cannabis sales be limited to users 18 and over

Shares of Aphria Inc., a producer and seller, increased bymore than five per cent to hit $5.34, while Mettrum Health Corp. shares increased by 7.7 per cent to end at at $7.16.

The task force, which was chaired by former federal cabinet minister Anne McLellan, recommended that pot besold in storefront locations, but called for a ban on co-selling cannabis with alcohol and tobacco products. That might impact the plans of some provinces, such as Ontario, whichhad hoped to sell marijuana in government-owned liquor stores.

Some of the other recommendations from the task force include:

• Legalizing recreational pot consumption, but limiting salesto those 18 and older, with a personal possession limit of 30 grams.
• Criminalizing illicit production and trafficking the drug to youth andinternational markets.
• Using tax revenues generated from pot sale for public education campaigns and further research on the health risks associated with cannabis consumption.

A report issued by Deloitte in late October said the recreational marijuana market could be worth about $8.7 billion annually at current market prices.

"On the production side, supplying even the low-end estimate of the recreational market would require producing over 600,000 kilograms of marijuana annually, a significant increase from what the medical marijuana industry is currently capable of producing," Deloitte said.

• Marijuana chain to defy law, open outlets in Montreal

That dollarfigure doesn't include ancillary businesses such as paraphernalia, testinglabs and security services. When those are included,the market potential jumps to up to $22.6 billion a year.

Against that backdrop, shares of top producer Canopy Growth went on a run over last few month, rising from just over $4 at the end of September to above $13 by mid-November, before giving up some of those gains.

• Another marijuana merger: Canopy Growth buys Mettrum

Earlier this month, Canopy unveiled plans to purchase domestic competitor Mettrumin a deal worth $430 million. The takeover would see Canopyget two Health Canadalicences to grow pot for medical purposesas well as Mettrum's strains of marijuana and itsline of hemp-based health products.