The big news for marijuana stocks south of the Canadian border is that President Trump announced he will likely lend his support toward ending the federal government’s ban on cannabis.
The ramifications of this step would be huge for U.S. weed stock companies, reshaping the cannabis industry and putting an end to the Justice Department’s threats of intervention.
Earlier this month when a bipartisan congressional group proposed the bill, Trump followed with his remarks the next day. This turnabout by Trump, however, has placed him at greater odds with Jeff Sessions, his Attorney General. Whereas the congressional bill Trump has offered his likely support to would give states the green light to move toward legalization without threat of federal crackdown, Sessions’ hard stance has only escalated in threats. Sessions has even lobbied Congress in an effort to reduce the MMJ protections that are currently upheld.
Among the leaders sponsoring the legislative proposal are Senators Elizabeth Warren (D-Mass.) and Cory Gardner (R-Colo.). A few months back, Gardner confronted the president after the Justice Department began once again ramping up threats of prosecution in legal states.
Trump, however, expressed his support of Gardner in relation to the bill, stating “I support Sen. Gardner. I know exactly what he’s doing. We’re looking at it. But I probably will end up supporting that, yes.”
Marijuana’s illegal federal status has made operating a business both unstable and risky for cannabis stocks, even with more states legalizing.
Currently nine states, in addition to Washington, D.C., have legalized recreational marijuana, with medical marijuana legal in twenty more states. However, businesses have been concerned of the threat of seizure by federal law enforcement and banks, in turn, have shied away from getting involved with cannabis businesses. Investors, too, have exercised wary caution.
At a recent news conference, Gardner addressed this issue, stating, “If you are in the marijuana business … you can’t get a bank loan or set up a bank account because of concern over the conflict between state and federal law. We need to fix this. It is time we take this industry out of the shadows, bring these dollars out of the shadows.”
In Gardner’s words, expecting firms to pay taxes while preventing them from participating in the financial system is a “public hypocrisy.”
Were the federal ban to be lifted, behind-the-scenes progress could also take place, such as creating standards for regulating marijuana and uniform testing. Scientists would also theoretically benefit, freed in their research pursuits to explore more medical uses of cannabis.
The proposal’s road ahead through Congress and the expansion of U.S. marijuana stocks, however, will not be smooth sailing.
Congressional leaders, even with public opinion polling in favor of legalization nationwide and the majority of lawmakers representing states which have at least legalized medical marijuana, have still been reticent about relaxing legislation. For example, though Washington, D.C. has voted in favor of legalizing recreational marijuana, the House has chosen to block sales of the substance. And an amendment made to the budget in 2014, offering marijuana businesses protection from DEA raids, is continually being attacked.
An expert on marijuana policy at the Brookings Institution, John Hudak, believes the Gardner-Warren bill “faces tremendous head winds.” Though Trump has been cautioned by a coalition of narcotics officer groups not to support efforts of federally legalizing marijuana, he still has expressed intent to do so.
Meanwhile, cannabis stocks in the U.S. are increasingly caught in the middle of the administration’s mixed messages.
Cannabis businesses panicked back in January, when the DOJ rescinded the Cole Memo from the Obama era, which had offered certain protections for legal sellers adhering to state laws. Sessions had been at the helm of this activity, warning businesses of potential prosecution, whether or not they operated under a legal state market. This, of course, provoked Gardner to speak out, reminding the president of assurances he had received earlier, that no raids would occur in his state.
Trump, in April, ordered the DOJ to retreat from its crackdown – a decision made without consulting Sessions, and indicative of tension in their relationship. However, prosecutors have backed away. To date, no seizures of cannabis companies operating in legal states or federal raids have occurred under this administration.
A former attorney from the Justice Department, John Vardaman, who played a role in drafting the Cole memo, said, “Remarkably little, if anything, has changed. Almost every U.S. attorney in states where marijuana is legal has decided to apply the same principles as the Cole memo.”
The Gardner-Warren bill would be most helpful to U.S. weed stock companies in the area of banking.
In effect, the bill would ensure the Controlled Substances Act were amended, specifically, to decriminalize marijuana sales, no longer considering them illegal transactions, in order to put financial institutions at ease.
Vardaman continued, “The very people you want involved in this market are the ones who have been most reluctant to get involved because of the banking issue. If you address that, you would have enormous beneficial effects for the industry.”
U.S. marijuana stocks and marijuana activists, while welcoming of Trump’s remarks, are still not at ease.
The president’s record for following legislation all the way through Congress is spotty at best. Hudak voiced this reserve, stating, “We have seen this president voice his support for a lot of things related to cannabis, but he has done absolutely nothing to move legislation. This is just more empty rhetoric from a president who is vague on this issue.”
Gardner, on his end, is working to grow a congressional movement, persuading more conservative lawmakers that this is an issue of upholding state rights. And more Republicans are getting on board, including Reps. Don Young of Alaska and Dana Rohrabacher of Costa Mesa.
And Gardner didn’t start off as a marijuana proponent, rather, he adjusted his stance after his Colorado constituents voted to legalize marijuana. Now he says, “This is a chance for us to express that federalism works, to take an idea that states have led with and provide a solution that allows them to continue to lead.”
Hopefully, other members of Congress will follow his lead.
(For more political news, read MMJ Stocks has a Champion in the U.S.: A Surprise Vote Combats Sessions’ Position On Marijuana)