President Sanders? President Trump Is Already Fueling Explosive Pot Stock Growth

Sanders Pledges to Legalize Marijuana on Day One as President

It’s safe to say that the notion of legalizing cannabis in the U.S. has taken big steps forward in recent years.

On the 1992 campaign trail, presidential candidate Bill Clinton said he experimented with marijuana, but famously added that he “didn’t inhale.” Moderates rejoiced.

Fast forward to February 2020 and presidential hopeful Bernie Sanders said he would federally legalize marijuana on his first day as president.

Some believe this would be the greatest thing to happen to U.S. pot stocks, and it could be. But it’s important to note that marijuana stocks have already done exceptionally well under President Donald Trump.

Election Promises Can Be Investing Tips

Every presidential candidate stands on a plethora of election promises. It’s what politicians do to woo voters. Those election promises can also give investors a leg up. Case in point: Ronald Reagan promised to pour money into the military. And he kept that promise.

After eight years of President Reagan being in office, U.S. military spending had increased 43% compared to the total U.S. military spending at the height of the Vietnam War. (Source: “Ronald Reagan’s Military Buildup,” United States History, last accessed February 7, 2020.)

That defense spending resulted in more troops, more weapons, and more military equipment.

Had you invested in defense stocks in the months leading up to the 1980 presidential election, you could have done exceptionally well.

The same can be said for healthcare stocks and President Barack Obama.

As for Trump, he campaigned as a pro-business candidate, promising tax cuts. Since he was elected, U.S. gross domestic product (GDP) growth has been strong, and the stock market is in record territory.

Would President Sanders Launch a New Era for Pot Stocks?

When it comes to campaign promises, few—if any—presidential hopefuls have been as aggressive as Sanders. And if he becomes president, we could expect a windfall for marijuana stocks.

At a recent campaign rally, Sanders promised, “On my first day in office through executive order we will legalize marijuana in every state in this country.” (Source: “Bernie Sanders Pledges Legal Marijuana In All 50 States On Day One As President,” Forbes, February 1, 2020.)

Sanders’s stance on cannabis is the most liberal among the candidates to be the Democratic presidential nominee.

Pete Buttigieg wants to make cannabis legal in the U.S., but his approach involves convincing congressional lawmakers of both parties. Joe Biden said he would not legalize marijuana until further studies were done.

Michael Bloomberg has said that trying to legalize recreational marijuana “is perhaps the stupidest thing anybody has ever done.” (Source: “Bloomberg: Trying to legalize marijuana is ‘perhaps the stupidest thing anybody has ever done’,” The Hill, January 23, 2019.)

Marijuana Stocks Have Done Exceptionally Well Under President Trump

This does not mean another term for Trump would be bad for pot stocks. Quite the opposite.

Right now, Trump is happy to allow individual states to determine their own path when it comes to legalizing marijuana. He has gone so far as to say he will support congressional efforts to protect states that have legalized pot.

As for legalizing cannabis at the federal level, Trump is taking a wait-and-see approach.

“We’re going to see what’s going on. It’s a very big subject and right now we are allowing states to make that decision,” said Trump. (Source: “President Trump Reiterates His Administration Will Let States Legalize Marijuana,” Marijuana Moment, August 30, 2019.)

After all, every vote counts and polls show that most Americans support some form of marijuana legalization. (Source, “Two-thirds of Americans support marijuana legalization,” Pew Research Center, November 14, 2019.)

Analyst Take

Under President Trump, virtually all marijuana stocks have done well, some even ratcheting up gains of more than 500%.

The cannabis stock market hit a rough patch starting in April 2019, but that had nothing directly to do with Trump or his administration. It mostly had to do with supply problems, high prices, scandals, and competition from the black market.

If anything, Trump’s hands-off approach to the cannabis sector has helped provide an environment in which the sector could thrive. And that probably wouldn’t change if Trump is reelected in November.

That hands-off approach would likely continue to help juice the shares of well-run cannabis companies and set up certain pot stocks to soar even higher when  marijuana eventually becomes federally legal.

Regardless of who is in the Oval Office in 2021, it could be wise for investors to have a diverse portfolio that includes cannabis stocks.