Your Marijuana Investing Questions, Answered
Editor’s Note: With just a handful of days left before the 2022 midterm elections, a slew of states will have ballot measures that deal with marijuana legalization.
As our colleague John Persinos puts it, legal weed stands at the biggest tipping point in history. And that means investors have a unique opportunity to profit in the coming days.
That’s why John held a special investment Town Hall on November 1, called “The Marijuana Millionaire Countdown.”
An archived version of this event is available to view for a limited time. In the meantime, we’re featuring some of John’s insights and expert analysis of this burgeoning industry.
Your Marijuana Investing Questions, Answered
Letter writing is a lost art form. Our digital society is characterized by short attention spans and an addiction to smartphone texting. It’s hard for an editor to compete with the endorphin rush people get when they hear the “ping” of an incoming text.
That’s why I’m so grateful when readers of Marijuana Investing Daily take the time and trouble to write and send me emails. Below are a few representative reader questions. I attempted to answer them with investment advice of universal applicability. I edited the questions for the sake of brevity and clarity (but I did so with a light touch).
The pivotal midterm elections…
“What’s the status of state laws regarding marijuana? I’m especially curious about the looming midterm elections.” — Jack S.
As of this writing, a vast swath of America now has access to state-legal cannabis, which is good news for pot investors.
In 2021, Virginia, New York, and New Mexico joined the growing list of states to legalize in-state sales of marijuana for adult use. In the 2020 November elections, five new states passed initiatives to legalize adult-use (i.e., recreational) and medical marijuana: Arizona, New Jersey, South Dakota, Montana, and Mississippi.
New state-level actions bring the total to 19 states and the District of Columbia whereby recreational marijuana has been legalized by ballot measure or legislation. To date, 37 states and DC have laws permitting marijuana for medical use.
South Dakota’s legalization measure that passed in 2020 has gotten caught up in a legal challenge that was filed by anti-pot forces, so marijuana remains illegal in that state. That’s probably about to change, though. Marijuana advocates put the matter on the ballot again, but this time in language that can withstand any challenges on technical grounds.
In the midterms, voters in South Dakota, Arkansas, Missouri, North Dakota, and Maryland will consider recreational marijuana initiatives. Polls show that these initiatives are all popular with voters.
The Great White North…
“I’ve noticed that a lot of marijuana companies are based in Canada. Why is that?” — Alan D.
When it comes to legalized marijuana, Canada is in the vanguard. Our neighbors to the north have always had a permissive and tolerant society. This attitude has extended to marijuana.
In October 2018, Canada legalized on the federal level the possession and use of recreational marijuana. Canada was the first G7 nation to take this bold step and it triggered an earthquake in the global marijuana industry. When Canada’s move prompted a slew of new marijuana companies to go public, it was logical for them to do so in that country. But since then, the playing field has widened around the world.
The Darwinian struggle…
“Marijuana companies come in several varieties. What type of canna-business stands the best chance of surviving the industry’s very tough competitive climate?” — Don P.
I foresee continued consolidation. Weak companies will go bankrupt and disappear altogether. Other companies that provide a valuable product or service but lack a competitive edge will get acquired. We’re already seeing a flurry of merger and acquisition activity among marijuana companies.
Avoid companies that provide the marijuana plant as just a commodity. Growing a marijuana plant isn’t a unique capability; those firms involved in tasks that are easily replicated will suffer from “commoditization” and a downward pressure on prices. I prefer marijuana companies that enjoy patent protection for their products and services.
The status on Capitol Hill…
“Several proposals to lift the federal ban on marijuana have been introduced with great fanfare, and then they’ve gotten nowhere. What are their real chances of passing?”— Joseph B.
We’re now witnessing the most marijuana-friendly U.S. Congress in history. In my view, it’s only a matter of time before marijuana prohibition is removed not just by the states, but also by the federal government.
Several bills to normalize marijuana laws are bottled up in congressional committees, as political partisanship on Capitol Hill gets worse ahead of the 2022 midterms. The Russia-Ukraine war and inflation are hogging the headlines. But the table is set for the federal ban to eventually fall by the wayside.
Case in point: Senate Majority Leader Charles Schumer (D-NY) and Sens. Cory Booker (D-NJ) and Ron Wyden (D-OR) recently introduced a bill to federally decriminalize marijuana. Wyden chairs the Finance Committee.
The Cannabis Administration and Opportunity Act (CAOA) would prevent Americans from getting arrested or barred from receiving essential services for using cannabis where it is legal. This proposal also would give state-compliant cannabis businesses unimpeded access to financial services.
The legislative proposal would remove marijuana from the list of controlled substances and begin regulating and taxing it. The bill would expunge federal non-violent marijuana crimes and allow individuals currently serving time in federal prison for non-violent marijuana crimes to petition a court for resentencing. It also would establish a fund to reinvest in communities that were harmed by the so-called War on Drugs.
Other legalization bills are pending in Congress; it’s my view that they’re likely to get rolled up into one major “omnibus” bill. We’ll know more, when the dust has settled after the November 8 midterms. Regardless, I can confidently state that the federal prohibition of pot is doomed. Looking for ways to profit from the global mainstreaming of cannabis? If you haven’t already invested in marijuana, it’s time that you did.
Don’t Miss This Special Event…
Editor’s Note: The legalization of marijuana offers a major investment opportunity for proactive investors. According to analysts, new state markets are likely to boost U.S. legal cannabis sales to $72 billion annually on a national basis by 2030. But it’s important to do your homework before investing in cannabis stocks.
That’s where John comes in. He recently held a special investment Town Hall, called the “Marijuana Millionaire Countdown.”
As the U.S. midterm elections rapidly approach, John explained the little-known reason why federal legalization of marijuana could be days away…and why a slew of states are poised to create new state-legal markets.
During the online event, John revealed the one simple marijuana trade that could dump piles of cash into your brokerage account, before the midterm votes are even counted. An archived version of this event is available to view — but only for a limited time.