COMMENT:

News that Coca-Cola is looking at getting into the cannabis drinks market has caused a buzz in the financial world.

What it emphasised was just how mainstream attitudes to marijuana have become in the North American business world. As is often the case, a dose of corporate capitalism has proved the catalyst needed to drive social change.

In fact what really blew my mind (man) was that the company they were dealing with - Canada's Aurora Corp - is worth NZ$12 billion.

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And it is just the third-biggest Canadian cannabis company.

The second-largest, Canopy Corp, has a market value of NZ$17b.

Corporate cannabis - or pot stocks as they've been dubbed - have become big business fast.

In the past week another Canadian pot stock, Tilray, blazed its way to new highs after it was awarded a limited export licence for US medicinal trials.

It surged 94 per cent in one trading session before mellowing out to a market value of around NZ$20b.

All three companies are now bigger than anything on the New Zealand stock exchange - our largest are A2 Milk and F&P Healthcare (both valued at around NZ$9b).

The pot stock spike this week does look like bubble territory, and a sign that investor hype has detached from earnings reality. It is being heightened by anticipation of full cannabis legalisation in Canada, which comes on October 17.

But unlike the hype about cryptocurrencies, or most tech start-ups, the cannabis trade is already a highly profitable business.

Economists at Toronto-Dominion Bank have estimated legalisation will boost Canadian GDP by about NZ$10b - although they note that some of this is activity already going on, that will simply be formally recorded once it becomes legal.

That's still good news for Canada's tax take of course. And Canada is not alone. Pot is increasingly being legalised or decriminalised around the world. Mexico, most have South America and numerous US states - including California - have, decriminalised or legalised.

In fact personal possession of small amounts is now ok down the entire Western coast of the Americas - from Alaska to the Argentina.

Other countries where it is legal or decriminalised include Portugal, the Netherlands, Belgium, Switzerland and Jamaica. More have relaxed the law for medicinal use.

This surge of corporate cannabis activity serves to highlight just how far off the pace New Zealand is on this - both as a social issue and as a business opportunity.

That's a shame for country that prides itself both in leadership on progressive social change and horticultural excellence.

We have some of the most restrictive medicinal cannabis laws in the Western world - despite overwhelming evidence of its therapeutic value for several specific illnesses.

A bill to broaden medicinal use is going through parliamentary process now and the Government has promised a referendum on the legalisation in 2020.

There's been some commercial progress too. In August, Hikurangi Cannabis became the first New Zealand company to secure a license to cultivate medicinal cannabis plants. Hikurangi will build high tech greenhouses and processing facilities near Ruatoria.

It has commissioned clinical trials to start next year for the first New Zealand-made cannabis medicines.

So New Zealand is tentatively moving in the same direction as the rest of the world. But on balance these steps still leave us several years behind Canada.

I'm not dwelling here on the moral debate about the risks and/or merits of recreational cannabis. The research indicates that it's not good for young people with developing brains. It's also not a good idea for anyone with a pre-disposition towards mental illness or addiction.

But as numerous other governments have now concluded, criminalisation does nothing to prevent its use by these groups.

By keeping the market completely unregulated it probably makes things worse. It certainly creates opportunity for real criminals and it makes criminals of many otherwise law-abiding people.

By waiting so long to move on the issue New Zealand has effectively opted out of this debate.

We'll need to get over our 20th century moral hang-ups because, globally, legalisation is happening with or without us.

When companies like Coca-Cola start getting involved you know the genie won't be going back in the bottle (or bong) any time soon.

What New Zealand will need is smart laws to maximise medicinal benefits while minimising harm and, ideally, making it all seem a bit boring to kids. The candy-store style pot dispensaries that popped up in legal US states like Colorado - full of weed infused edible treats - hardly seem like a great idea.

We don't want a repeat of the easy availability we saw with legal synthetic cannabis. That ended in a blanket ban which has forced it back underground with disastrous health consequences.

One advantage of being a late mover on cannabis law reform is that we shouldn't have to experiment with untested regulation.

We have the opportunity to assess regimes around the world and customise one to suit.

The disadvantage of waiting too long is that a multibillion-dollar economic opportunity may go begging. We could see big global brands ready to move in as soon as our laws allow it.

That really would be reefer madness.