Dear Reader,
Today’s editorial comes from Ryan Stancil. He’s been a part of the Outsider Club team for some time, usually behind the scenes as our copy editor. He writes poignant prose from time to time, and his most recent on cannabis investing in the Trump era is no different. It’s below for you to enjoy.
To your wealth,
Nick Hodge
Publisher, Outsider Club
Since beginning his bid for president, Donald Trump’s plan of attack has, in part, involved a lot of unpredictability. It carried him past his republican opponents as well as Hillary Clinton, and it seems like the new normal while his administration is in the White House.
From the reactions that last week’s news got, it doesn’t seem like anyone expected Trump’s administration to take a hard stance against legal marijuana, but that looks to be the direction the narrative is taking.
In last Thursday’s daily briefing, Press Secretary Sean Spicer was quoted as saying:
“I think that’s a question for the Department of Justice — I do believe that you’ll see greater enforcement of it,”
As you may know, newly appointed Attorney General Jeff Sessions is largely against the drug. He has stated that “good people don’t smoke marijuana” and seems to be in favor of the idea that it is a gateway drug.
This leads many to believe that his Department of Justice will be more adamant about enforcing marijuana on the Federal level, which could make life harder for businesses that operate in places where it is legal on the state level.
It tramples all over the “States’ Rights” mantra that many republicans claim to be fans of but, more to the point, it poses a serious challenge to a billion-dollar industry that is growing every year.
Or does it?
Pushing Back and Finding Alternatives
There is a lot of speculation as to why Trump’s administration is going in this direction. Take, for instance, the fact that language discouraging the use of private prisons was scaled back the same day this announcement was made. Some see a connection between the continued use of these facilities and a crackdown on marijuana users in states where it’s legal.
Likewise, it is becoming increasingly evident that large pharmaceutical companies have a lot to lose when competing with legal marijuana, so it would make sense that they would throw lobbying dollars toward keeping it illegal.
But, as has been another trend in the Trump administration so far, pushback from the populace is becoming more widespread.
Over the past few years, the number of Americans in favor of legal marijuana has ticked higher to the point where it is legal in seven states as well as the nation’s capital, and legal to use for medical purposes in just over half the country.
Because of that, lawmakers in states where the drug is legal have vowed to fight back against any attempted enforcement from the Trump administration.
In response to Spicer’s comments, a bill introduced by the new Congressional Cannabis Caucus, called “Respect State Marijuana Laws”, seeks to block any enforcement action by the federal government at the state level. The caucus is made up of representatives from states that have legalized the drug and the bill is gaining support among members of congress.
It’s hard to predict just how far this bill will go, but the fact that these lawmakers saw fit to introduce the legislation at all speaks volumes about the fight the administration will face if it moves ahead with this crackdown.
As this unpredictability unfolds, investors in the marijuana space may wonder where that leaves them.
Fleeing North
Like so many people who vowed to leave the U.S. for Canada if Trump won, marijuana investors may find refuge in our neighbor to the north if he delivers on his promise to ignore states’ rights and punish users and vendors.
Like in the U.S., attitudes toward marijuana in Canada trend toward making it legal, and Prime Minister Justin Trudeau has promised to make legalization a priority during his tenure.
This should pave the way for marijuana companies to carve out their shares of the Canadian market, which has the potential to be even bigger than the country’s robust beer market.
This means that investors in the weed space have their options, regardless of what the current administration in the U.S. does.
Keep your eyes open,
Ryan Stancil
