California Marijuana Laws in 2018: 2 Positives for Weed Stocks

california marijuana laws

California Marijuana Laws in 2018

This year will see the largest marijuana market so far open up to recreational weed. No, I’m not talking about Canada.

California is not only larger than Canada by about three million people, it produces about $1.0 trillion more in gross domestic product (GDP).

So, when the new California marijuana law in 2018 (the Medicinal And Adult-Use Cannabis Regulatory Safety Act) came into effect on New Year’s Day, permitting recreational marijuana use, it was a huge boon to the industry.

Marijuana stocks will see benefits down the line as the numbers trickle in over the next few months. It’s clear that the legislative move is a massive benefit to the industry overall.

But not everything is peaches and rainbows…

While the new CA marijuana laws in 2018 are positive for the industry, it’s still worth noting that a President Donald Trump crackdown on marijuana is still possible.

Attorney General Jeff Sessions has long been an opponent of the drug, subscribing to the tired “gateway drug” philosophy, which contends that marijuana itself may not be harmful, but it can lead to harder drug abuse, like the Oxycontin epidemic that the U.S. and much of the western world is currently facing.

It’s also important to keep in mind that the California marijuana laws of 2018, while great for weed stocks and the industry, are not immutable. Federal law supersedes state law and therefore puts California under the purview of Sessions and his agenda, should he choose to more aggressively pursue federal action against marijuana.

While a crackdown is unlikely, it is still possible, which could put a very real damper on the high times they’re experiencing in California.

Still, there are many positives to be taken away from the state’s progress.

First, as mentioned at the outset, California represents the largest market to open itself to recreational marijuana. With nearly 40 million people now eligible to purchase marijuana should they choose (provided they are of age, of course), this is a powerful step forward for the industry.

With more and more of the U.S. opening up to the idea of recreational pot, California marijuana laws in 2018 not only help the state, but also push the issue for the country as a whole. That is invaluable.

A second massive benefit of the current California marijuana legislation is that it has begun creating jobs in all sorts of ancillary and adjacent industries.

While not surprising, legal weed has increased business for lawyers, marketers, security providers, and a host of other workers. (“California Poised To Become Largest Jobs Creator – For Marijuana,” Forbes, February 14, 2018.)

So, aside from weed stocks being boosted by California, many other industries are seeing an uptick from marijuana legalization. This makes it easier for states to justify legalization, due the added tax and economic benefit.

It also makes it harder for the federal government to justify a crackdown. Not to mention, this particular federal administration is laser-focused on the economy. Making a move against a burgeoning industry seems very much out of character, no matter how many reservations Sessions may have with the trade.

With California’s medical marijuana market already at $3.8 billion in 2017 and 5.3 million estimated cannabis users in the greater Los Angeles area, this is a frothy market to do business in, and that’s good news for weed stocks. (Source: Ibid.)

The new California marijuana laws in 2018 have served to both create a new market that will bolster weed stocks and help strengthen the argument for recreational pot.

Of course, the future of marijuana stocks rests on how quickly federal legislation can be passed in the U.S. for legalizing pot. While that seems a long way off, especially with the current administration, moves are being made on the national level that are promising for marijuana investors.

The Marijuana Justice Act was a big step forward for marijuana legislation in the United States. Introduced in both houses of Congress, the move was largely symbolic, due to its inability to pass through either part of the legislative branch.  (“House Democrats introduce a bill to legalize marijuana and provide ‘restorative justice’ to communities impacted by the war on drugs,Business Insider, January 17, 2018.)

Still, it represents a veritable seismic shift in the conversation that the U.S. is having about marijuana.

Whereas in years past, both parties vehemently condemned the drug, we now have major legislators and party up-and-comers in the Democratic Party that are looking to make marijuana legalization a main part of their policy agenda.

With an election coming in 2020, the power of having a pro-weed president cannot be understated. Mix that with the fact that the majority of Americans (64% according to a recent Gallup poll) believe that marijuana should be legal, and you have a potent combination that may see U.S. marijuana legalization arrive sooner than predicted. (“Record-High Support for Legalizing Marijuana Use in U.S.,” Gallup, October 25, 2017.)

Should that perfect scenario play out, expect marijuana stocks to receive a huge boost in the next few years. We’re talking hundreds of percentage points of gains.

Of course, this is the best-case scenario and by no means a sure thing.

But progress being made on the state level like we’re seeing in California is promising. And it certainly helps bring that best-case scenario closer to reality.