2 Positives for Marijuana Stocks to Take from NJ Marijuana Legalization Process

Marijuana Stocks
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NJ Legal Marijuana: Is It Close?

As more and more U.S. states legalize medical marijuana, many have begun to ask the inevitable question: Should recreational marijuana legislation follow?

That’s exactly what’s happening with New Jersey (NJ) marijuana legalization at the moment. The state, with laws already on the books permitting medicinal weed use, is now discussing whether to take the next logical step and allow recreational marijuana use.

The topic of NJ legal marijuana is important for a variety of reasons, but most of all in how the state is tackling the process of marijuana legalization.

Far from making it easy to sell pot in the state, New Jersey has put in a number of obstacles that one must overcome in order to legally sell marijuana.

First, a seller must have a location where the property owner permits marijuana selling and the town or county has no explicit laws against marijuana sales. This means that, despite legalization coming down from the state level, municipal governments still have the power to derail marijuana sales. (Source: “NJ marijuana legalization: How to get a marijuana license in cutthroat weed market,” Asbury Park Press, February 8, 2018.)

Considering that attitudes on marijuana are sure to vary from place to place, that makes NJ marijuana legalization more complicated than it appears at first blush.

Applicants who apply for the license, even with a location in mind, still face a number of hurdles. They must have squeaky-clean criminal records. They also must have capital. Preference is given to those with experience selling the drug, though that only includes those who operated within the law, naturally.

Even with all those factors in their favor, people seeking marijuana licenses still face about 15-to-1 odds of getting the license.

The strict regulation has done little to temper the enthusiasm for marijuana in the state, however. The New Jersey Cannabis Symposium in January welcomed over 750 people.

And there’s plenty of reason to be excited about the possible NJ marijuana legalization.

You see, NJ legal marijuana would mean that 130 million people would be within a day’s drive of legal pot. That opens the door to a huge boost in legal weed sales.

Right now, the state is strictly divided over the course it takes with legal pot. Democratic Governor Phil Murphy supports legalization, which goes a long way toward helping the process along. But there are still many towns and lawmakers who oppose the drug, some of whom must have attended the Jeff Sessions school of marijuana-hate. (Source: “NJ marijuana legalization: Monmouth freeholder compares it to car thefts, murders,” Asbury Park Press, February 10, 2018.)

Attorney General Sessions is well known for his distaste for marijuana, and it would seem that there are more than a few like-minded individuals in the Garden State.

One county lawmaker was forced to apologize after he claimed that marijuana was more addictive than cocaine. Others have made similar nonsensical claims. (Source: “Lawmaker apologizes for comparing marijuana to cocaine,” The Seattle Times, February 12, 2018.)

Regardless, the NJ marijuana legalization effort is good for marijuana stocks, even if it doesn’t pass.

What NJ Marijuana Legalization Means for Marijuana Stocks

There are two key takeaways from the NJ marijuana legalization process that marijuana stock enthusiasts can grasp.

The first is that legalization is coming to the United States…eventually. It may be slow. It may be full of stops and starts. It may be painful. But legalization is going to come to the U.S. (or at least the vast majority of the U.S.) if states have their say.

Many of the most populous states in the union are already fairly pro-weed, and that will only increase with time. And, as politicians observe that sweet, sweet increase in tax revenue, you can bet that more than a few minds will be changed.

There will be holdouts, with some states being harder to crack than others, but NJ legal marijuana will either be another domino to fall, proving that marijuana acceptance is going mainstream, or it will take its time.

In either case, the very fact that another state is looking to join the eight others with legal recreational pot is good for business. When the U.S. market does open up to pot in a more complete way, versus the piecemeal process we’re currently seeing, you can bet that marijuana stocks will skyrocket.

How Marijuana Stocks Could Benefit

The second reason that marijuana enthusiasts should be happy to see the NJ marijuana legalization process get underway is that Canadian marijuana stocks are dying to get into the market, but U.S. federal law is making that difficult.

Due to the Trump administration (including Jeff Sessions), the Toronto Stock Exchange (TSX) has pretty much prohibited companies from getting too involved in U.S. marijuana companies. The reasoning is that, since the drug is federally illegal and the current White House has made moves to persecute the drug more assiduously, the TSX has decided that Canadian marijuana stocks ought to withdraw from the U.S. market or face potential delisting.

But as more U.S. states legalize all forms of marijuana, it will be far more difficult for the federal government to justify its anti-marijuana stance. That should open up the U.S. to more investment, and allow Canadian marijuana stocks to jump in on an extremely lucrative market.

Analyst Take

The two key takeaways, then, regarding marijuana stocks from the New Jersey story are 1) over 100 million people will have access to marijuana should NJ marijuana legalization pass, and 2) it will increase pressure on the White House to back off of marijuana.

In both instances, marijuana stocks are likely to benefit both in the near and long term.