From the beginning, I knew that [Colorado legalization] was just the first “domino” to fall… leading to full, federal legalization.
Given that we’ve been under marijuana prohibition for generations, many folks are still skeptical. Well, based on the facts, news, and trends – not a gut feeling for or against marijuana – I do expect legalization, and soon. And I’ve got six reasons why.
Catalyst #1: SAFE Banking Act & STATES Act
The first official step to full-blown legalization will likely be one of two specific bills that are working their way through Congress.
In March, the Secure and Fair Enforcement (SAFE) Banking Act passed the U.S. House Committee on Financial Services with bipartisan support. If passed, the bill will allow banks to work with marijuana companies without fear of breaking any laws.
Only a small number of regional banks and credit unions currently take the risk of offering services to the industry. Banking costs for marijuana companies are exceptionally high – try $5,000 a month maintenance fees! – due to the risk banks are taking by technically breaking federal laws. So, access to traditional banks/loans would be a game-changer.
The other piece of legislation, the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, will allow individual states to make their own laws on cannabis, including banking. Any bank lawfully working with marijuana businesses will be protected under the STATES Act.
At least one of these bills will likely be passed in the coming months, and possibly both. Either would be a major step toward legalizing marijuana in the United States.
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Catalyst #2: The 2020 Election
Note: Please understand that my analysis on politics and the stock market is 100% from an investing point of view. I have no desire to push any type of politics on you in any manner. I hate it when other people do that to me, and I would never do it to you. My one and only goal is to make you money.
The 2020 presidential election is already in the daily headlines. I’ve lost track of the number of Democrats that have thrown their hats into the ring. I know it’s more than 20… and the election is still more than a year-and-a-half away!
These candidates come from all types of backgrounds. Some are far left and others are more moderate. The candidates will undoubtedly take vicious shots at each other as they try to secure the Democratic nomination, but there is one topic that could create that kumbaya moment – marijuana.
Nearly every Democratic candidate has called for legalization of even recreational marijuana as well expunging federal charges related to cannabis. Former Vice President Joe Biden is one major exception, but I don’t think we’ve heard the last from him on this issue. Expect the topic to be at the forefront of town halls and debates over the next 18 months.
In the meantime, several bills were introduced in the last year that would legalize marijuana nationwide. The one that has the best chance – and the backing of big-name Democrats – is the Marijuana Justice Act. It was originally introduced in 2017, but a vote never took place. New Jersey Senator Cory Booker reintroduced the bill in February. Its chances of getting through the Senate are very low, but the bill does put pressure on the Republicans up for re-election. That brings me to the next catalyst…
Catalyst #3: President Trump
I have attended a few cannabis conferences recently, and I stay in touch with industry insiders. In just the last few months, I’ve noticed a significant increase in the number of insiders who expect President Trump to introduce a bill to legalize marijuana. Based on what I’m hearing from them and people who have connections in D.C., the odds of the president introducing such a bill are now well above 50%.
We know President Trump wants another term, and according to a poll by Civilized, cannabis users plan to vote come November 3, 2020. Civilized is a pro legalization site, but about 90% of people surveyed said they intend to vote in the next presidential election. That’s significant, and about 3% higher than non-cannabis consumers.
Democrats will make sure marijuana is front and center in all debates. And it makes sense politically for Republicans, too. Backing marijuana’s legalization will not hurt the party’s voter base and could bring some moderates over to their side.
That is where President Trump comes into play. If legalizing marijuana can swing some moderate Democrats to his side, he will not hesitate. I and others I talk with increasingly believe President Trump will strike preemptively and legalize marijuana before the election.
Catalyst #4: The DEA
Marijuana remains a Schedule 1 drug in the United States, which is one reason it is illegal. According to the Drug Enforcement Administration (DEA), Schedule 1 drugs are generally unsafe with a high potential for abuse and no accepted medical use.
More and more studies refute all three of those criteria when it comes to marijuana. The last qualifier – no accepted medical use – is now known to be simply false.
What will it take for the DEA to remove marijuana from Schedule 1? Well, the first thing is old-fashioned common sense. Heroin, LSD, and ecstasy are all Schedule 2 drugs, which in theory means they are less dangerous than marijuana. That’s crazy. You don’t need a medical or biology degree to see how out of touch and outdated that is.
Beyond common sense, there are other things that will force the DEA to change marijuana’s classification. The most likely are more studies demonstrating the positive medicinal effects of marijuana.
This is yet another silly situation because government regulations make it extremely difficult to perform those studies. However, new Attorney General William Barr has said he supports more marijuana research, and the more individual states do, the higher the likelihood this will change.
The bottom line is that the DEA’s blessing is necessary for marijuana to be legalized. If all other parties, including Congress and President Trump, get behind legalization, the DEA will have no choice but to succumb to the pressure.
Catalyst #5: The Farm Bill
Something called the Farm Bill doesn’t sound all that exciting, but believe me, it is. The bill legalized hemp in the United States for the first time in over 80 years.
To be clear, the legalization of hemp did not have any direct effect on marijuana laws. But it did open up the conversation of doing the same thing with cannabis, which is important. If the Farm Bill was a test run of legalization, the government should be satisfied.
We’re already seeing demand for hemp-related goods. Products that include cannabidiol (CBD), the non-psychoactive part of the plant, are now found in food, drinks, skincare products, etc. What’s more, they are available at places like CVS Health (NYSE:CVS), Walgreens (NASDAQ:WBA), and Bed, Bath & Beyond (NASDAQ:BBBY). The hemp-CBD market is expected to balloon 40X over the next few years. Full story at Investorplace.com
