Marijuana Stocks: The U.S. Just Got One Step Closer to Legal Pot Nationwide

Marijuana Stocks
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Legal Pot in the U.S.

The fight over legal pot in the U.S. is one that is being held on multiple fronts. From states legalizing marijuana both for recreational and medicinal use to a push for nationwide legislation, the political weed games being played are going to have a huge impact on the future of marijuana stocks and the marijuana stock market. But today, that future has never looked brighter.

When a U.S. senator proposed a bill today that would legalize the drug nationally while also incentivizing the states to legalize it, that was seen as big move forward for the marijuana industry.

You see, the thing about the marijuana market is that it’s currently shut out from some of the largest consumer bases in the world, including the United States. While progress is being made, with countries like Canada on the path to national legalization, that still only brings in a very small percentage of potential customers, limiting revenue and slowing growth.

The U.S. is naturally one of the more prized markets that marijuana companies would love to see make sweeping legislation toward legal pot. At the moment, the only way for marijuana to be consumed legally in the U.S. is via state laws, which is a lengthy process, considering the states have to fall like dominoes, one by one, whereas federal legislation could lay the groundwork for mass reform regarding the green herb.

Nevada, Colorado, California, Alaska, Maine, Massachusetts, Nevada, Oregon, Washington, and the District of Columbia are the only places in the Union where recreational marijuana is currently allowed, while many other states allow for medical use.

While marijuana stocks have enjoyed the benefits of the increasing scope of legal pot, it is still by no means even close to gaining full U.S. legalization. That is, until today.

Marijuana Stocks and the Future of Legal Weed

The moment the wind starts blowing in the direction of full-blown legalization in the U.S., expect a huge boost to the marijuana stock market. While the majority of Americans support legal pot—a CBS News poll has the number as high as 61%—there has been little to no action towars such an outcome on the national level.

Senator Bernie Sanders (I-VT) proposed a rescheduling of marijuana in 2015, but, since then, progress has been slow on the national level. That is, until Senator Cory Booker (D-NJ) proposed a bill that would not only legalize the drug, but actively incentivize the legalization of marijuana on the state level while also punishing states with the most draconian drug laws.

While the bill has absolutely no chance of passing, this is still very much a big deal, and is important to the marijuana stock market as a whole.

The thing about national legalization versus state-level law is that the states can only guarantee that residents won’t face trouble from state law enforcement. Federal agents could theoretically step into a legal marijuana dispensary anywhere in the country and shut them down, if they so chose. Federal law supersedes state law, so these companies are still technically illegal under the eyes of the feds. Of course, federal law enforcement knows better than to step on the toes of the states, which would result in a calamitous states rights debate should they seek to actively subvert the legislation.

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Still, they do have that power, and could wield it whenever they like. U.S. Attorney General Jeff Sessions has also gone on record multiple times as being a strong opponent of marijuana, and, with the power of the U.S. federal government, he could institute stricter enforcement of federal law even in states that have legal pot.

And that doesn’t even touch on all the secondary issues that national legalization would resolve, like the ability to transfer product or funds over state lines.

So, even though Senator Booker’s plan is doomed to fail (unless he can somehow muster up a miraculous coalition in Congress to pass the bill), it’s a step in the right direction for legal pot, and a good move for marijuana stocks in general.

Bills like the one put forth by Booker will help soften Congress up to other legislation that would be pro-marijuana, as well as push the needle toward open discussion about nationally legal pot.

With the American people coming out strongly in favor of recreational marijuana becoming legal—alongside success stories of states and countries that have transitioned into legal pot and have reaped huge tax benefits as a result—moves like these are going to be precursors to the eventual legalization in the United States.

Whether that is two or ten years away remains to be seen.

weed stock chart

Chart courtesy of StockCharts.com

What’s Next for Marijuana Stocks?

In addition to the bill being put forward by Booker, there’s quite a bit of other news in the White House that could push marijuana stocks toward gains.

The biggest development has to do with Jeff Sessions, who has been taking flak from President Donald Trump for his actions regarding the investigation into Russian collusion.

If Sessions is ousted from his position (not exactly a rarity in this administration), his replacement could very well be more positive on marijuana, which would ease the way toward more friendly dealings from the federal government, or at least a return to the laissez-faire attitude of the Barack Obama White House.

In either case, marijuana stocks will likely benefit from more legislation being put forward and an easing in tone from the feds.