Marijuana News Today: U.S. Federal Marijuana Bill Could Be First Step Toward Legalization
Marijuana News Today
In the marijuana news today, we have the hottest name in the Democratic Party right now, Senator Kamala Harris, coming out with a full-throated endorsement of pot reform.
Harris and House Judiciary Chair Jerry Nadler co-sponsored the MORE Act of 2019, a bill that would federally decriminalize marijuana and expunge convictions for low-level marijuana possession.
The bill would also allow federal taxation of marijuana, with the revenue generated being used to fund programs to help people who have been harmed by the War on Drugs and to provide loans to small businesses owned by people of color.
“Times have changed — marijuana should not be a crime,” said Harris. (Source: “Sen. Kamala Harris Introduces Law to Federally Legalize, Tax Marijuana,” Rolling Stone, July 23, 2019.)
We need to start regulating marijuana, and expunge marijuana convictions from the records of millions of Americans so they can get on with their lives. As marijuana becomes legal across the country, we must make sure everyone — especially communities of color that have been disproportionately impacted by the War on Drugs — has a real opportunity to participate in this growing industry.
Harris is a rising star among the current crop of U.S. presidential hopefuls. Formerly a district attorney from California, the senator recently made waves when she attacked Joe Biden during the first Democratic Party presidential debate.
Even before that, Harris had developed a significant following due to her time on the Senate, where she gained notoriety for her questioning of Brett Kavanaugh during his Supreme Court hearing, among other viral moments.
All this is to say is that Harris is a serious contender for the Democratic presidential nomination, and her support of marijuana reform shows just how far the issue has come in recent years.
About a decade ago, when Harris was serving as California’s attorney general, she opposed a bill that would have regulated and taxed recreational marijuana in the state. Now, however, Harris’s position has evolved.
There’s two ways to look at that evolution: either she’s doing what is politically expedient or she has genuinely had a change of heart. In either case, marijuana stocks will be a beneficiary (eventually).
The fact that it’s actually now more politically sound to support marijuana legalization in the U.S. than to oppose it speaks volumes about the progress the drug has made.
The bill will face significant opposition and likely will not pass, but it’s not hopeless. The House currently belongs to the Democrats, and several Republican senators are also known for having marijuana-friendly positions.
But even if the bill doesn’t get passed, Harris has a real shot at being in the White House in 2021. If she makes it there and keeps marijuana reform as a policy agenda, there’s a good chance that U.S. marijuana legalization will soon be on the horizon. That would mean huge gains would be coming for pot stocks.
While gains are likely in many pot stocks’ futures, the present is less positive. A marijuana pullback has hit and continues to wreak havoc across the industry.
The past several weeks have been painful for marijuana investors, but this was to be expected. I had been predicting a downturn since early 2019, when gains were coming hard and fast.
This is an expected fall and one that the sector will recover from in short order. For now, however, investors will have to make do with a bad situation.
One stock in particular, however, has impressed in recent weeks: Tilray Inc (NASDAQ:TLRY). Tilray stock remained flat (instead of dropping) in early-morning trading today, while over the past five days it has declined about three percent.
TLRY stock has managed to avoid much of the painful downturn that has hurt so many of its rivals. The stock, in fact, remains north of $40.00 a share, a strong showing for a company that previously had been on a months-long downward trend.
The reason that Tilray stock is uniquely suited for the current marijuana stock pullback is due to the company’s pretty poor showing in early 2019.
Whereas many other stocks saw strong gains at that time, Tilray had been falling steadily since its initial public offering surge. Once that decline abated, investors began returning to the stock and its price started to rise once again, just in time to counteract the current marijuana stock downturn.
While I don’t expect TLRY stock to soar in the near future, I believe it will be well suited to weather the current market fall and see strong gains on the other side.
On the flip side of Tilray stock we have CannTrust Holdings Inc (NYSE:CTST), which at this point is pretty much a doomed stock. CTST stock tumbled another 20% in early-morning trading today, after having lost significant value over the past several weeks.
After peaking at $10.00 a share in March, CannTrust stock is now trading around $2.00, representing one of the worst collapses in the marijuana stock market we have ever seen.
CannTrust stock’s troubles began when much of its inventory was halted after Health Canada inspected one of the company’s production facilities and found it to be in violation of regulations. CannTrust now risks having its license suspended.
Furthermore, the company is now the target of a class action lawsuit seeking damages for what the suit claims were misleading public statements and lies to Health Canada. (Source: “Analyst Suggests CannTrust’s (NYSE: CTST) Debacle Could Get a Lot Worse,” GlobeNewswire, July 22, 2019.)
The situation is going from bad to worse for CTST stock, and I simply don’t see the company’s share price recovering any time soon.
TLRY and CTST Stock Performances
The performances of TLRY stock (black line) and CTST stock (blue line) over the past week are seen on the chart below:
Chart courtesy of StockCharts.com
As outlined above, the marijuana news today is bittersweet.
On the political front, we have yet another major politician coming out in support of U.S. marijuana legalization. Despite federal legalization likely being years away, the new bill introduced to the House could get passed, creating a semi-legal marijuana market in the U.S. much faster than we first believed.
On the flip side, the marijuana stock market still flounders, with most shares falling in recent weeks. Despite that, several companies are still excelling.