Massive Shift in Marijuana Stocks, with Potential to See 100% Gains in 2021
On Politics & Pot Stocks
Here’s a simple fact: politics and marijuana stocks are intrinsically tied together. While marijuana investors may or may not find the political machinations of the U.S. exciting, it’s impossible to separate pot stocks from marijuana politics.
Reading the political tea leaves, then, is a great way to get an idea of which direction marijuana stocks are headed, and to potentially see massive gains by playing the market just right.
And what are the politics telling us now? They’re screaming “bullish” on pot stocks.
Don’t believe me? See the following stock chart:
Chart courtesy of StockCharts.com
That’s just a snapshot of five of the top marijuana stocks. Expand it further into the past and you’ll see more than 150% gains from winners like Innovative Industrial Properties Inc (NYSE:IIPR).
IIPR stock is a cannabis stock I’ve been writing about for years. And the good news is that it’s not too late to get in on the gains.
So what’s happening in the weed industry that’s causing such a surge? Simple: U.S. politics.
I’ve written ad nauseam about how important a marijuana-friendly White House would be, concerning the U.S. marijuana legalization question.
When people ask, “Will marijuana become federally legal in the U.S.?” that’s totally off. The question should be “When will marijuana become federally legal in the U.S.?”
And right now, it’s looking like the answer is a resounding soon, which explains the jump in the value of pot stocks.
To be fair, “soon” is a nebulous term. It could mean next year or within the next 10 years. After all, some people have been waiting for marijuana legalization for upwards of three decades.
In the meantime, whether the incoming Joe Biden administration will be the one to make a substantial move toward federal U.S. pot legalization (which is, again, something I’ve written about many times), there’s something that we can guarantee about the next team that runs Washington: it will not be as anti-marijuana as Donald Trump’s administration.
While President Trump has always been ambivalent about pot, many of his cabinet members were anything but.
Former Attorney General Jeff Sessions was a staunch anti-marijuana crusader who threatened to deploy the power of the federal government in enforcing marijuana prohibition—even in states where the drug had long been legal.
This flew directly in the face of Trump’s predecessor, Barack Obama, who took a very laissez-faire position when it came to pot. The Obama administration neither pushed for federal legalization, nor made an effort to enforce the federal laws against marijuana.
With President-elect Biden, we have several people on his team (like Vice President-elect Kamala Harris) who have come out in direct support of pot legalization.
But a recent development—and one that’s very positive for weed bulls—concerns Sessions’ old job: attorney general. Often referred to as the “top cop” in the nation, the attorney general has vast power and leeway to enforce federal law as they see fit.
Biden has yet to name who his attorney general will be, but it’s a virtual guarantee that the individual will be superior to Sessions on the issue of cannabis. The information we’ve been gleaning about the hiring process is heavily favoring marijuana legalization in the U.S.
Here’s what we know: of the three or four candidates being considered for the position, all of them are being evaluated through the lens of criminal justice reform. (Source: “Biden’s Attorney General Search Narrows,” The Washington Post, December 11, 2020.)
Now, “criminal justice reform” is a big term that encompasses a host of issues—police reform, sentencing reform, procedural reform, etc.—but one of the pillars of modern criminal justice reform is pot legalization.
Consider that thousands upon thousands of people have been banished to prison for non-violent, marijuana-related crimes. What’s more, the price of enforcement of marijuana laws is expensive.
Finally, there’s a growing fear among activists that, when marijuana eventually becomes legal nationwide, large corporations will be the main beneficiaries, earning obscene profits selling the drug while, just a few years earlier, many individuals were confined to a cell for doing the exact same thing.
Therefore, there’s a hunger within the Democratic Party and among activists to legalize marijuana in the “right way.”
That pressure may not bring about the best-case scenario (total U.S. pot legalization), but at the very least, it will mean the attorney general will be forced to be sensitive about the issue.
That, in turn, could result in a laid-back approach when enforcing federal drug laws in the meantime—an even more laid-back approach than that of Obama’s cabinet.
And more than likely is that we’ll see some concession to the pot industry—even if it’s just a reclassification of marijuana from being a Schedule I drug, meaning that medical research could take place at a faster pace in the U.S.
Which is to say that the future for marijuana stocks is extremely bright, from a political standpoint. And that bright future has already sparked a huge run on pot stocks.
That isn’t likely to change. In 2021, the top marijuana stocks are likely to keep surging as more and more good news floods in from the quasi-friendly White House.
With the backdrop of U.S. marijuana legalization possibly coming in the next few years, investors have a recipe for huge returns.
The marijuana industry is known for being volatile and, at times, unpredictable. But right now, all signs are pointing to growth.
The political atmosphere in the U.S. has never been more favorable to pot stocks, and we’re seeing the market respond to that goodwill. We’re likely to see that goodwill expand in 2021, which means we can expect marijuana stocks to rise in tandem.
All that comes together to form what is perhaps the most bullish market for pot stocks we’ve seen in the past few years. And it’s likely to get even more bullish.