Marijuana Shares Fell on Thursday: Examining the Cause
The Marijuana Opportunity, Reinvestment and Expungement (MORE) Act, a comprehensive marijuana legalization bill, is expected to receive a vote on the House floor this Friday, following approval from the Rules Committee. If passed, the MORE Act would remove marijuana from the list of controlled substances under federal law, legalizing the drug at the federal level in the United States.
The bill includes provisions for expungement of marijuana-related convictions and reinvestment in communities disproportionately impacted by marijuana enforcement. If the MORE Act becomes law, states would be allowed to set their own marijuana laws without federal interference.
Investor responses to the potential legalization or federal reform of marijuana are likely mixed but generally optimistic, with key caveats. Projections suggest U.S. legal cannabis retail sales could reach $34 billion by the end of 2025, supporting around 425,000 jobs nationwide.
The SAFER Banking Act, which aims to provide legal clarity for banks to serve state-legal cannabis businesses, is gaining support. This legislation would reduce the risks associated with cash-only operations, improve tax collection, and enhance regulatory oversight. However, legislative developments show that while banking reform is progressing, federal rescheduling or descheduling of cannabis remains stalled.
Investors may increase positions in cannabis-related equities and ancillary businesses while closely monitoring Congressional actions and federal regulatory signals. The ongoing federal uncertainty and continued prohibition complexities could temper investor enthusiasm.
Recent polls show 91% of Americans think marijuana should be legal, at least for medicinal purposes. If legalization happens, it will remove marijuana stocks' final excuse for failing to turn a profit from selling a finally legal drug. With one-third of Senate seats up for election this year, potential pressure for "yay" votes could increase.
The Liaison Group predicts a similar tally to the one that passed this same law two years ago, with approximately 228 votes for legalization and 164 against. However, enhanced penalties for sales near schools and parks are being proposed in some bills, which could complicate matters.
In summary, investors are responding with increased interest and cautious optimism due to potential banking legislation easing financial access and reducing operational risks, anticipated federal rescheduling or reform that could dramatically expand market accessibility and institutional investment, and continued legislative roadblocks and funding riders that maintain regulatory uncertainty. As the MORE Act moves closer to a vote, investors will be closely watching developments in Congress and the U.S. Senate.
Sources: 1. Marijuana Business Daily. (2021, March 3). Cannabis industry to grow to $34 billion by 2025, supporting 425,000 jobs, according to new report. Retrieved from https://mjbizdaily.com/cannabis-industry-to-grow-to-34-billion-by-2025-supporting-425-000-jobs-according-to-new-report/ 2. National Conference of State Legislatures. (2021, January 14). Marijuana Legalization: Federal-State Issues. Retrieved from https://www.ncsl.org/research/health/marijuana-legalization-federal-state-issues.aspx 3. National Organization for the Reform of Marijuana Laws. (n.d.). Federal Bills. Retrieved from https://norml.org/laws/federal/ 4. Marijuana Moment. (2021, February 1). Marijuana Legalization Could Be 'Game Changer' For Multi-State Operators, Analyst Says. Retrieved from https://www.marijuanamoment.net/marijuana-legalization-could-be-game-changer-for-multi-state-operators-analyst-says/
- As the financial industry eagerly awaits the possible legalization of marijuana, some investors are eyeing the potential for increased profits in the marijuana stocks market, given the expected rise in retail sales to $34 billion by 2025, supporting nearly 425,000 jobs nationwide.
- Intrigued by the prospect of less financial obstruction and reduced operational risks, investors may also allocate more resources to ancillary businesses within the sports industry, given the immense opportunities that legalizing marijuana could bring to sponsorships, endorsements, and branding for sports-related cannabis products.
