Marijuana stocks are getting hammered because of a do-or-die legalization vote in Canada

Andrew Szeto/Tweed, Inc.

• Canada's marijuana legalization bill is facing a crucial vote in the Senate Thursday afternoon.
• If the bill fails, it would push back the timeline for legalization and force the government to re-write the bill.
• Marijuana stocks are getting slammed ahead of the vote.
• Analysts don't think it's likely the bill will fail.

Canada's marijuana legalization bill is facing a do-or-die vote in the Senate Thursday afternoon, and related stocks are getting slammed.

The bill is set to go into effect as soon as this summer, provided it doesn't get killed on the Senate floor.

The North American Marijuana Index, a measurement of all publicly-listed marijuana stocks in Canada and the US, was down 3.91% as of this writing, over fears Prime Minister Justin Trudeau's Liberal party would not have enough votes to overcome Conservative Party opposition to Bill C-45, which, if passed, would legalize the consumption and sale of marijuana nationwide.

Marijuana Index

Unlike in the US, the Canadian Senate is an appointed body, so it's unlikely that Trudeau would allow the bill to go to a vote if there was a chance of it failing.

Analysts in the marijuana industry aren't too concerned the bill will fail, despite the market jitters.

"Frankly, I think this is too important a file for the government to 'allow it' to fail," Vahan Ajamian, an analyst at the Toronto-based Beacon Securities said in a note. "If it were to get shot down, it would be embarrassing for the government."

Most Independent and Liberal senators support the bill, according to the CBC, but there is some serious opposition on the Conservative side. The bill needs to hit a majority of votes to pass on to a third and final vote in June.

The issue here is that there are two Senate committees on the road - who won't be present for the vote - and some who are abstaining because of illness, reports CBC.

Out of 70 Senators who are set to vote on the bill at 2 p.m. ET, 33 are Conservative and likely to oppose the bill. That leaves a slim margin for the Liberals to marshal the votes needed to pass C-45.

If the bill doesn't pass, it will force the whole process to go back to the House, where it will have to be renegotiated, making it highly unlikely recreational sales will start by this summer.