U.S. Marijuana Stocks
Despite being a global trade, almost all of the top marijuana stocks are based in Canada. And that makes sense; it’s the only country with a powerful economy that has fully legalized marijuana.
Even so, many expect to see a boom in U.S. marijuana stocks when the entire country eventually legalizes pot. But we actually may see a boom for pot stocks sooner than we thought.
The U.S. House Rules Committee is currently considering an amendment that would defend all state-level legal cannabis programs from being interfered with by the U.S. Justice Department.
There’s already a provision in a spending bill that forbids the U.S. Justice Department from using funds to prosecute marijuana programs in states, but this bill would go one step further. (Source: “Congress Votes To Block Feds From Enforcing Marijuana Laws In Legal States,” Forbes, June 20, 2019.)
U.S. Attorney General William Barr has already stated that he would adopt a hands-off approach to marijuana, but this bill would preserve protections in law and would be a massive step forward for U.S. marijuana stocks.
While it’s worth noting that the protections in the bill would only be guaranteed for a year, it may provide the cover necessary for U.S. marijuana companies to grow without fear of federal government interference.
We’ve already seen a number of pot stocks list on the Nasdaq and New York Stock Exchange, marking a shift in confidence.
But large banks and other national corporations have had reservations when dealing with marijuana companies (and their money) precisely because of the threat of violating federal law.
While this new bill won’t do away with all those issues (banking specifically is still going to be contentious), it will, at the very least, provide some cover for marijuana companies that are operating solely within states where cannabis is legal.
It would allow pot companies to become more surefooted and confident, which in turn could inspire them to take their shares public.
You may remember that, when former U.S. attorney general Jeff Sessions was in power, a U.S. marijuana crackdown was a real concern. It had investors rightfully worried about just how “legal” U.S. pot operations were, considering that the federal government essentially held a sword over its head.
Federal law still prohibits marijuana and technically overrules state law, allowing federal agencies to prosecute marijuana companies if they so chose.
But the proposed bill would strip the Justice Department of those powers and provide a much higher degree of safety to U.S. marijuana companies.
With that major threat removed, we could see another rush of U.S. marijuana initial public offerings that would in turn spur on another green rush, not unlike the massive gains from marijuana stocks that we saw in Canada when legalization became an inevitability there.
The future of the marijuana sector lies in U.S. pot stocks. That’s pretty much undisputed. What is in dispute is just when those will fully emerge.
With this new bill potentially passing in Congress, that day may be sooner rather than later.