Marijuana sits near, if not at the top of, the list of North American industries experiencing the most rapid growth. A partnership between BDS Analytics and cannabis research firm ArcView recently brought forth data of projected growth for the legal North American weed industry through 2021, predicting a 28% increase each year. If growth follows this prediction, the legal weed industry may see sales near $25 billion by 2021.
In addition to sales growth, the marijuana stocks industry has been privy to dramatic shifts in favorability in a fairly short time period. Between 1995 and 2017, Gallup national polls saw favorability increase from a quarter in favor to a high of 64% respondents supprting the legalization of marijuana. Marijuana stocks have been soaring largely due to this increased public support as well as rapid sales growth.
Marijuana stocks in the U.S. face a limited ceiling in the industry, owing to its Schedule I classification.
The struggle for continued growth of the legal weed industry in the U.S. comes down to a firm ceiling: the federal government’s scheduling of marijuana. As a Schedule I substance, marijuana is 100% illegal, considered prone to abuse and without recognition of medical benefits. On a state level, however, legislation is gradually shifting, with medical marijuana legal in 29 states and recreational marijuana legal in nine.
Still, much of marijuana stocks hope for future growth lies in the hands of federal lawmakers, who, unfortunately, have only pushed back harder during the current administration. Twenty-six states have the advantage of getting the issue on the ballot and putting it to a vote in November elections based on support from the state’s residents (i.e., I&R process). However, the remaining 24 states are entirely dependent on the state’s legislature to pursue any form of marijuana legalization. This means that legalization is highly unlikely in states where its elected officials hold unfavorable views toward cannabis, even if the majority of its residents are in favor of legalization.
Three states may surprise the industry and boost marijuana stocks by legalizing medical marijuana this year.
Three states that typically lean Republican (i.e., less favorable toward marijuana) and aren’t afforded the advantage of the I&R process may surprise the industry this year as they attempt to become the next states to legalize medical cannabis.
Kentucky, traditionally a GOP stronghold, may be the biggest shock of them all to strengthen marijuana stocks through legalization.
The state’s pathway to creating a legal industry for medical marijuana may come in the form of House Bill 166, primarily backed by Democratic Rep. John Sims. The bill would require medical patients with the approved ailments to obtain a doctor’s prescription before filling it at a dispensary regulated by the state. The bill would bolster statewide job creation, offset the opioid crisis and benefit an estimated 100,000 to 150,000 medical patients in Kentucky.
Passing HB 166 would allow for nine legal ways to ingest marijuana; smoking wouldn’t be one of them. Furthermore, the decision to allow dispensaries would be left in local hands, if optioned, meaning cities or counties would decide. Colorado’s legalization of recreational pot came to pass in a similar fashion, with roughly three quarters of the state’s jurisdictions voting against recreational weed dispensaries.
Tennessee, another state heavily leaning toward conservative political views, may pass state legislature allowing for medical marijuana and supporting marijuana stocks growth.
The Medical Cannabis Only Act of 2018 was introduced in January by Republican Rep. Jeremy Faison and Republican Sen. Steve Dickerson with the intent of legalizing cannabis for patients with more than a dozen ailments. Smoking would also not be permitted, as with Kentucky. The bill would require doctors to obtain a state license in order to prescribe marijuana to patients and medical patients receiving a prescription would be able to purchase cannabis oil-based products.
Some of the estimated 65,000 beneficiaries of Tennessee’s legislation would be cancer patients and patients suffering from hepatitis C, Crohn’s disease and Parkinson’s disease. Tennesseans with qualifying medical conditions would first need a state-issued registration card; a card that would limit patients to a monthly quota of cannabis oil-based products courtesy of a chip reader.
Also in the same vein as Kentucky, the bill would give local government the option of deciding whether to permit MMJ dispensaries or not. As of the beginning of March, the measure was approved by a 4-3 vote in the House Criminal Justice Subcommittee – one of many hurdles cleared in the path to legalization.
Marijuana stocks may sooner benefit from Virginia as the state may be nearer legalization than the first two with medical cannabis legislation expected to pass in the next few weeks.
The state, whose counties are usually split between progressive northern lawmakers and conservative southern lawmakers, saw an astounding 40-0 Senate vote of approval in early February to move forward in the path to legalization of medical marijuana.
The nature of Virginia’s House bill (HB 1251) and Senate bill (SB 726) was identical when both came to vote and passed, making it simple to reconcile them and prepare them for legislative vote. By late February, when the reconciled measure reached the state’s House and Senate, it passed and moved to Democratic Gov. Ralph Northam, who had already stated his support of a bill that would give doctors authority to decide the appropriateness of medical cannabis for their patients on a case-by-case basis. Under this particular bill, doctors could exercise discretion in prescribing CBD oil or THC oil to patients.
Virginia appears to be on track to become the 30th state to legalize marijuana for medical use in the near future.
(For more state victories, read Vermont Goes Green! More Good News for Marijuana Stocks.)