Companies Are Excited About the Major Developments in U.S. Marijuana Legalization

Companies Look to Take Advantage of U.S. Marijuana Legalization

It has been awhile since we did a major check-up on the U.S. marijuana legalization push, and we’ve recently had several big developments in that sphere that are making pot companies giddy.

It’s important to remember that the year started off very strong in terms of cannabis legalization. Several states, including New York and New Jersey, were gearing up to legalize recreational pot.

Some of that momentum has tapered off since, with legislative boundaries slowing the push for recreational marijuana.

But all that is changing, with a few strong wins at the state level for marijuana legalization and an overall trend in the right direction for federal legalization—an event that would send marijuana stocks soaring.

Illinois Marijuana Legalization

The most recent victory on the U.S. marijuana legalization front comes by way of Illinois. The state recently passed a pot legalization bill in its state Senate, sending the bill to the state House, where it will be voted on again. It the bill succeeds, Illinois will become the 11th U.S. state to legalize recreational marijuana.

Furthermore, the bill would create a licensed dispensary and cultivation system and direct the governor to pardon people who have been convicted for low-level pot possession. (Source: “Legal recreational marijuana in Illinois a step closer after Senate vote; bill heads to House next,” Chicago Tribune, May 30, 2019.)

The bill in Illinois is unique in that it attempts to tackle the disproportionate targeting of minority communities during marijuana prohibition.

It would do so by creating a social equity program to help minority business owners enter the marijuana industry via incentives like grants and loans. It also establishes a grant fund to help pay for programs in communities disproportionately affected by the war on drugs.

“Illinois is poised to become the first state in the nation that put equity and criminal justice reform at the heart of its approach to legalizing cannabis, and I’m grateful that the Senate has taken this important step,” said Governor J.B.  Pritzker. (Source: Ibid).

Why is this bill important? Aside from being a way for the state to atone for its draconian marijuana prohibition over the past decades, it’s also very strong help for marijuana legalization at the national level. Here’s why.

Social justice is on the tongues of nearly every Democratic Party presidential hopeful. The movement is having a major moment on the national stage, with each presidential hopeful trying to outdo one another in this area.

Support for a federal marijuana legalization bill that also prioritizes social justice could easily be adopted by a candidate as a main pillar of their campaign.

Remember that Canadian Prime Minister Justin Trudeau rode a wave of support for marijuana legalization to victory during his 2015 election, making legalization one of his signature promises.

That worked out swimmingly for Trudeau in the election, and a few years later, Canada became the first modern economy to legalize pot. We’ve seen the results on the pot stock market since then.

In the case of the U.S., we have a number of Democrat presidential hopefuls already endorsing one degree or another of marijuana reform. But none have yet to make it a lodestone of their campaign.

But Illinois’s push for marijuana reform with a dose of social justice may provide an enterprising Democrat presidential potential nominee to take the issue and run with it, helping separate them from what is an increasingly crowded pack.

If they do, we could very well see a pro-pot-reform president in the Oval Office within the next two years. It’s also not impossible that federal U.S. marijuana legalization is able to garner bipartisan support, being one of the few issues that could see senators and congress members reach across the aisle.

Of course, there are many reasons to support marijuana legalization at the national level, at least from a political viewpoint. One is that there are billions of dollars to be made from tax revenue if the country legalizes pot.

Colorado Marijuana Laws Improve

One of the more contentious areas in marijuana law that still needs to be nailed down is the concern over public use of marijuana. Namely, can businesses allow patrons and customers to consume marijuana on their property?

In Colorado, a bill that proposes to allow just that was signed by the state’s governor, Jared Polis.

The legislation says it authorizes “marijuana hospitality spaces in which marijuana may be consumed on site and retail marijuana hospitality and sales establishments in which retail marijuana, retail marijuana concentrate, and retail marijuana products may be sold and consumed on site in the establishment’s hospitality space.” (Source: “Colorado governor signs law legalizing marijuana social use areas,” The Hill, May 29, 2019.)

IT also says “The bill establishes requirements and prohibitions for the new hospitality spaces and requires the state licensing authority to promulgate rules governing the new hospitality licenses and spaces.”

This comes on the back of concerns about where people are enjoying their freshly-legalized weed.

“Up until this bill, there’s been no way to have safe public consumption,” said Polis. “I’ve smelled it walking my dog. For many of us with kids, we want to make sure we don’t have that in our neighborhoods.” (Source: Ibid.)

“What does this have to do with pot stocks?” you may ask. Well, every state that institutes new laws can then be referenced when the eventual federal marijuana law comes into play.

So look at these state laws like the junior varsity team, with the varsity coach looking at which players to elevate to the top level.

Some states—like Colorado, possibly—will permit public marijuana consumption. Others may balk at that prospect.

While I’m certain that marijuana will be legal in the U.S. within the next three to seven years, the degrees to which it will be legal are yet to be determined.

If the federal government decides to take a gung-ho approach (unlikely, but possible), it may choose to adopt wide-ranging permissions for marijuana.

A federal U.S. marijuana legalization bill could, for instance, expressly permit the use of marijuana in licensed public spaces, much like with alcohol. It will more likely be left to the states to decide when the weed reform bill is eventually drafted, but it’s still a possibility.

The long and short of it, then, is that if Colorado can successfully implement a system that permits marijuana consumption in licensed spaces—think pot bars—that would open up a whole new source of revenue, which in turn would help marijuana stocks move higher.

Think about how much alcohol sales would be harmed if booze could only be served at home: no more drinking at bars, clubs, comedy shows, sporting events, theaters, etc. It would, to say the least, be devastating for alcohol companies.

Conversely, if marijuana is given some similar type of leeway a alcohol, that would dramatically accelerate not only marijuana’s destigmatization due to its presence in the public sphere, but also radically help boost sales in the years to come.

So, you see, almost every law that is passed at the state level in the U.S. could have a major impact on the future of pot stocks, and may even determine just how high this industry can rise.

Analyst Take

U.S. marijuana legalization is a foregone conclusion. With each state that legalizes the substance, the writing on the wall couldn’t be any clearer.

The specifics of pot reform in the U.S., however, have yet to take concrete shape. While we have outlines and assumptions, ultimately, the marijuana law that passes at the federal level is going to be a hodgepodge of a number of state laws synthesized together into what the feds deem to be the best way forward for marijuana laws.

That makes following the state laws hugely important, since they will give us a good idea of where the cannabis industry is headed. Illinois and Colorado are each in their own way helping to form the future of the marijuana sector in the United States.

And, as I’ve said numerous times, the status of marijuana laws in the U.S. will determine the future success of marijuana stocks.