Why Marijuana Is Not Legal in the U.S. Federally (Yet)
We’re experiencing something of a pot renaissance right now. Countries around the world are relaxing their marijuana laws, with almost every modern economy inching toward cannabis legalization in one form or another.
Chief among them (and most important) is the United States. The campaign for U.S. marijuana legalization is likely to continue making huge strides in 2020, but it’s being held back by one key roadblock: the federal government.
You see, while marijuana is being legalized in the U.S. on a state-by-state basis, technically this is being done outside the purview of the federal law.
What this means is that, since federal law supersedes state law, federal agencies like the Drug Enforcement Administration (DEA) have the power to crack down on ostensibly legal operations in any of the states where marijuana sales are permitted by the state government.
We haven’t seen anything of the sort though. In fact, quite the opposite.
Marijuana has begun garnering more and more political support from elected officials, with key members of both the Democrats and Republicans pushing pro-legalization messages. Some Democrats have even gone as far as making marijuana reform a key pillar of their election platforms.
Perhaps the most significant push in 2020 for U.S. marijuana legalization has been in the presidential race. The majority of the top candidates for the Democratic Party maintain pro-legalization (or at least pro-decriminalization) stances.
This is unprecedented in U.S. politics. If one of the pro-pot presidential candidates ascends to the White House in 2021, we can expect to see marijuana stocks surge.
In any case, the marijuana industry will not be able to truly flourish until the U.S. legalizes the drug across the country. As it stands, companies have to grow and sell their marijuana within state borders, denying them the ability to trade across state lines—even though it could be more efficient to produce and sell plants in different states.
Another big success for marijuana came by way of the Secure And Fair Enforcement Banking Act of 2019 (SAFE Banking Act), which was passed in the House in September 2019. This act allows banks to handle money from the cannabis trade, alleviating a huge problem in the U.S. marijuana industry.
The situation regarding pot legalization has been improving both in Congress and at the White House. Even President Donald Trump, who many believed could be an enemy of the marijuana industry, has proven to be friendlier to pot as time has gone on.
Right now is the most friendly situation we’ve ever had for marijuana stocks in the United States. And looking forward, it’s only going to get better.
Map Showing States Where Marijuana Is Legal
As seen in the below map, the majority of the U.S. population now has access to legal pot in one form or another—with the exception of Texas.
What the above map demonstrates is that the U.S. is, for all intents and purposes, a pro-marijuana country. With 33 states having legalized marijuana in some form, and with 11 of those states and D.C. also permitting recreational pot, there is a huge amount of support for marijuana in the country.
Polls have been demonstrating for years that the majority of people in the U.S. support some form of pot legalization.
The real barrier to full legalization is at the federal level. But as more and more states join the list of jurisdictions with legal cannabis, we can expect to see pressure mount on the federal government to catch up with the times.
Couple that with new support from presidential candidates who may be in the position to do something about drug prohibition in 2021 and you have a perfect storm for U.S. marijuana legalization.
It’s worth noting which states are pot holdouts: ones in the South and the American Heartland. Both areas skew Republican, but a Democrat winner in the next presidential election would likely push the needle greatly toward federal pot legalization.
The tide is turning and to the victors will go the spoils—in this case, marijuana stockholders.
Marijuana Legalization History
The progression toward federal U.S. marijuana legalization is looking great in 2020, but it didn’t get there overnight. It’s the product of decades of transformation in social and political views on pot.
In 1973, Oregon became the first U.S. state to decriminalize the drug, marking a huge turning point in the way Americans viewed what is considered a mostly harmless drug.
From there, other states began pushing for marijuana law reforms. Another major stride was in 1996, when California legalized medical marijuana.
This is hugely important because, as we’ve seen time and time again, medical marijuana reform almost always precedes recreational marijuana reform.
Many states followed the Californian example until 2012, when Colorado and Washington became the first two states to legalize recreational marijuana. Other states have followed, and we now have 11 states plus D.C. that permit recreational marijuana, with an additional 22 states permitting medical marijuana.
Next came the all-important Cole Memo, which was a Barack Obama administration policy to not prosecute marijuana operations in states where it was legal at the state level, even though federal law was technically being broken.
This status quo remained until the end of Obama’s presidency.
While President Donald Trump has been cagey at best in relation to pot, he later came out in favor of states’ right to decide on how to deal with marijuana.
But Trump had also named Jeff Sessions as attorney general. Sessions was a notorious anti-drug crusader who had retrograde views when it came to marijuana. There were concerns that Sessions would crack down on pot, and that seemed plausible as he rescinded the Cole Memo.
Fast-forward to the present day, however, and Sessions is long gone from the top law enforcement spot in the country. Now in 2020, U.S. marijuana legalization will see its biggest political push yet federally.
The cannabis industry has already scored several legislative wins in the United States.
For example, the Agriculture Improvement Act of 2018 has allowed hemp to be produced across the country. It also opened the U.S. up to the cannabidiol (CBD) trade, which is one of the more lucrative sectors related to the marijuana industry.
And with polls increasingly showing public support for cannabis legalization, lawmakers have been finding their spine on this issue.
Overall, the situation for U.S. marijuana legalization in 2020 is better than it has ever been.
Oklahoma in particular has a wonderful model for legalizing medicinal marijuana. And the next state-level legalization of recreational marijuana is fast approaching.
Next States to Legalize Weed
The two states most likely to legalize pot next are New Jersey and New York.
While New York has made several smaller steps toward marijuana legalization (like New York City abandoning its prosecution of many marijuana crimes), New Jersey is right around the corner from legalizing pot.
New Jersey has been hemming and hawing when it comes to legalization, but a referendum on the ballot in 2020 could help push things forward.
New York, meanwhile, has decriminalized marijuana in the state but has stopped short of legalizing the drug. That may change in 2020.
Can You Profit From Marijuana in the U.S. Today?
Regardless of the outcome of the push toward U.S. marijuana legalization in 2020, there are already many great pot stocks trading in U.S. markets.
All the pure-play marijuana stocks on the New York Stock Exchange and Nasdaq are Canada-based, but that doesn’t prevent investors from jumping in.
Furthermore, many of these companies are looking to acquire—or have already acquired—U.S. assets for future marijuana production.
From Canopy Growth Corp (NYSE:CGC), a Canadian marijuana stock with a strong foothold in the U.S. market, to Curaleaf Holdings Inc (OTCMKTS:CURLF, CNSX:CURA), the opportunity to profit from the U.S. marijuana market is growing.
While I doubt that U.S. marijuana legalization will take place at the federal level in 2020 (although the current administration is known for surprises), we will likely continue to see a steady stream of state-level legalization roll out across the country.
Furthermore, we’re likely to see more politicians make this a priority issue as it gains popular support.
What that means is that 2021 could be the year that the U.S. legalizes pot federally—and sends marijuana stocks higher as a result.