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 state of the states…
“What’s the status of state laws regarding marijuana?” — 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.
In the 2022 November midterms, voters in Missouri and Maryland approved recreational marijuana initiatives.
In June 2023, Minnesota became the latest state to legalize recreational marijuana.
New state-level actions bring the total to 23 states and the District of Columbia whereby recreational marijuana has been legalized by ballot measure or legislation; 38 states and DC have laws that permit marijuana for medical use.
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.
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 2024 presidential election. 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.
Read This Story: Is The GOP Going to Pot?
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. We’ll know more, when the dust has settled after next year’s elections.
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.
As cannabis and psychedelics shed legal restrictions and social stigmas, some related equity investments are superb. But many others are not. You need to conduct due diligence.
That’s where my publication, Marijuana Profit Alert, comes in. By applying my proprietary screening methodologies, I pinpoint for subscribers the most attractive plays on the psychotropic revolution. To learn more, click here.
John Persinos is the chief investment strategist of Marijuana Profit Alert. You can reach him at: mailbag@investingdaily.com
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