Marijuana Stocks Could Take a Hit With Trump’s Possible Crackdown

Marijuana Stock
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Is a Donald Trump Marijuana Crackdown on the Way?

Marijuana stocks are lighting up the stock market, perhaps only outdone in hype by the cryptocurrency rush. But much of those gains have been made north of the border, where Canada is approaching a full legalization date for both medical and recreational marijuana. In the U.S., a President Donald Trump marijuana crackdown has been and continues to be a threat to the future of marijuana stocks both in America and Canada.

You see, there’s only so many people in Canada. It’s a relatively small market for marijuana, especially considering there’s a whole wide world out there of people who already indulge in the drug. They just do so without the backing of the state.

Despite it’s small population, Canada will still be the first western developed nation to implement a federal legalization bill in 2018, as well as the largest country to do so to date in the world. That’s why Canadian marijuana stocks are exploding right now.

But the true potential in the market lies in opening up to other countries around the world, with the U.S. obviously having the potential to be one of the strongest markets in the world for the green herb.

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As such, let’s take a look at Trump’s recent State of the Union address, as well as other actions he’s taken, to get a read on just where he stands on marijuana.

Is Marijuana Legal in the U.S.?

First of all, it’s important to establish that, technically, no marijuana usage is legal in the U.S. That’s why people fear a Donald Trump marijuana crackdown in the first place.

While many states, like California and Colorado, notably passed laws legalizing recreational and medical cannabis use, the U.S. legal marijuana industry is still not really legal.

The reason for that is due to preemption, which is the principle that federal law supersedes state law. And according to federal law, marijuana is still illegal. Therefore, a federal agency, such as the Drug Enforcement Agency, could theoretically step in and shut down any marijuana grower or seller, no matter what state laws are on the books protecting them.

The Obama administration issued the Cole Memorandum, basically saying that the feds would stay out of state business. Trump’s notoriously anti-marijuana Attorney General, Jeff Sessions, did away with the Cole Memorandum, increasing the risk of a Donald Trump marijuana crackdown.

State of the Union Speech 2018

While Trump’s State of the Union speech for 2018 did not address marijuana specifically, he did continue to espouse his support for law enforcement, which we can implicitly read into as support for Sessions’s push to prosecute marijuana more aggressively. (Source: “State of the Union 2018: Where Is the Pot?Cannabis Now, January 31, 2018.)

tim black tweet

“Escalating the War on Drugs by scapegoating immigrants and pushing for increased drug arrests will only exacerbate the crisis by diverting scarce resources away from evidence-based public health interventions that have actually been proven to reduce the harms of problematic drug use, including overdose,” said Grant Smith, Deputy Director of National Affairs at the Drug Policy Alliance, following the State of the Union address. “It is surreal that Trump would call for prison reform and an escalation of the War on Drugs in the same speech.” ( Source: “Drug Policy Alliance Statement: State of the Union Addresses Opioids, Prison Reform,” Drug Policy Alliance, January 30, 2018.)

Analyst’s Take

A U.S. legal marijuana industry is still a long ways away, despite pushback and the majority of Americans supporting marijuana legalization in one form or another (according to recent polls).

Any shift on this would dramatically propel weed stocks, especially Canadian marijuana stocks, which will already have the infrastructure established to take advantage of the new market–and move on to a bigger high than the one they’re already riding.

Conversely, moves like the State of the Union address and other potential hints that a Donald Trump marijuana crackdown is on the way could limit stock growth, as well as damage the stock value of Canadian stocks as well by dampening their potential.

Frankly, I don’t see a Donald Trump marijuana crackdown taking place anytime soon. The president himself has been unenthusiastic at best in his pursuit of a more aggressive marijuana policy. While Sessions is a known drug prohibitionist, the two have had conflict in the past, and I don’t see Trump prioritizing marijuana, considering all the other issues he has to face.

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