Senator McConnell’s Hemp Bill Could Catalyze a Big Rally in U.S. Marijuana Stocks

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The Bluegrass State May Be Next to Legalize the “Green Grass”

Senator Mitch McConnell is about to table a bill to legalize hemp in the United States. The bill, if passed, could lay the groundwork for marijuana legalization at the federal level and usher in a golden era for marijuana stock investors.

The Kentucky senator is of the view that the federal government should remove hemp from the list of controlled drugs and instead list it as an agricultural commodity.

McConnell obviously has an incentive to get the crop legalized. Hemp produced in Kentucky makes money for farmers and boosts the state’s agricultural economy.

Just to make it clear, this green plant has multiple uses. Not only does hemp contain beneficial nutrients, making it a great additive for foods and drinks, it boasts medicinal properties. On top of that, hemp has historically been used in making paper, fabric, and building supplies. One of its properties is that it’s a good insulator. In short, the uses of hemp far outweigh its possible abuses.

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In fact, hemp shouldn’t even count as a drug, since it does not have psychoactive properties. It contains very little tetrahydrocannabinol (THC), the ingredient in marijuana that gets you high.

On the contrary, hemp is considered beneficial because it carries a high content of cannabidiol (CBD), the ingredient that—in addition to countless other benefits—soothes pains and relieves nausea. That’s something that cancer and leprosy patients have greatly benefited from.

Then why is hemp illegal?

It’s because the U.S. Drug Enforcement Administration (DEA) lists CBD as a “Schedule I” drug with the likes of cocaine and heroin. You might be surprised to know that alcohol and tobacco don’t make the list of Schedule I drugs, but marijuana and hemp do, because of their constituents. It’s absurd!

This is exactly why McConnell wants to reason with the federal government  when he puts forward his bill for the “Hemp Farm Act of 2018” in early April. (Source: “Mitch McConnell to introduce bill that would remove hemp from controlled substance list,” CNN, March 26, 2018.)

Now, although it is derived from the same cannabis plant as hemp, marijuana is considered hemp’s evil sister, since it gets you high. But so does alcohol. My point is that, if the federal government caves to legalizing hemp, there will be no logical reason for legislators to keep listing marijuana on Schedule I.

Sooner or later, the government will come to its senses and do the right thing—that is, legalizing marijuana and taxing it like alcohol. It makes both intuitive and economic sense to do so.

U.S. marijuana stocks have so far lagged their Canadian counterparts, due to the U.S. federal government’s unfair treatment of marijuana as a narcotic. But once this veil of uncertainty is lifted and U.S. marijuana companies are producing and selling freely, there will be no stopping these stocks from replicating the exponential returns delivered by their Canadian peers.

Analyst Take

The North American marijuana industry is on a tear as it delivers eye-popping triple-digit returns on marijuana stocks in just under a year. The legal marijuana industry is now firing on all cylinders, with North America providing the necessary fuel.

Canada is expected to fully legalize weed later this year, while the U.S. is seeing one state after another moving toward legalization (despite resistance from the center). Earlier this year, Vermont became the first U.S. state to legalize weed through a legislative order, and the ninth state to allow recreational use of weed.

While Senator McConnell’s bill goes for review by the federal government, there’s a good chance it may simultaneously knock some sense into state legislators. McConnell’s home state, Kentucky, could become the 30th U.S. state to legalize marijuana for medical use.

U.S. investors should be watching this development closely, since it could become the catalyst for a grand rally in marijuana stocks.