Marijuana stocks along with the rapidly growing legal marijuana industry has been nearly unstoppable for quite some time. The sales of legal medical and recreational marijuana are expected to expand by about 30% in 2017, 45% in 2018, and peak at just north of $17 billion in 2021, per the “Marijuana Business Factbook 2017,” a newly released report from Marijuana Business Daily. And this growth has meant one thing to businesses and investors: More money.
Over the past year, a good amount of marijuana stocks have doubled or tripled in value. Investors have been almost aimlessly buying into pot stocks with the outlook that state-level expansion will continue, and that recreational legalization in our neighbors to the north, Canada, will thrive with their recently passed legal marijuana bill.
Could Marijuana Stocks Be Affected By Jeff Sessions ?
Yet, marijuana stocks and the industry have one big hurdle they’ve yet to overcome: restrictive U.S. federal laws.
Even though 28 states have legalized medical cannabis and residents in eight states have voted in favor of legalizing recreational weed, the federal government has been unwavering on its view of marijuana as a schedule I substance. A schedule I drug — which places marijuana on par with heroin and LSD — is entirely illegal and has no recognizable medical benefits. This scheduling also exempts pot-based businesses from taking normal corporate tax deductions, and it makes it incredibly tough for weed businesses to secure basic banking services, including something as simple as a checking account.
The U.S. Drug Enforcement Agency (DEA) had an opportunity to reschedule marijuana last summer, but chose to deny two petitions requesting it do so. The DEA cited a lack of safety and clinical benefit evidence, based on findings from the Food and Drug Administration, and signaled that a system of checks wasn’t in place to regulate dispensing cannabis for medical purposes. Since the DEA can take years to review petitions, it seems unlikely that the regulatory body would review weed again anytime soon.
And at the center of it all is newly appointed Attorney General Jeff Sessions. While in the Senate, Sessions made it very clear that he opposes any expansion of marijuana, and has gone on record numerous times suggesting that marijuana is not medicine, and that it leads to an increase in crime. Though Sessions received no money apportioned by the federal government to crack down on marijuana use and weed-based businesses in the 2018 budget proposal, Sessions’ sway with President Trump could change that tune in the years to come.
If you recall, White House press secretary Sean Spicer commented in February that the Trump administration would be markedly different in regulating marijuana than the Obama administration, meaning a crackdown could still be coming. Add this all together, and we have a pretty encompassing view of why most marijuana stocks are still losing money, and why they may continue to do so for the immediate future. This Jeff Sessions rumor could spark a rally in marijuana stocks However, there could be a proverbial light at the end of the tunnel for marijuana stocks.
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