Unless you’ve been living under a rock, you know the 2016 elections are coming up in November. Shareholders of marijuana stocks like GW Pharmaceuticals PLC-ADR (NASDAQ:GWPH), Terra Tech Corp (OTCMKTS:TRTC) and Insys Therapeutics Inc (NASDAQ:INSY) have much more important votes on their minds than the one to elect the next president.
Marijuana Stocks Watching These 9 States
In the 2016 elections, voters in nine states will be weighing in on marijuana legalization. Montana will be voting on whether to loosen restrictions on its medical marijuana program. Voters in Florida, Arkansas and North Dakota will be voting on legal marijuana for medical use.
Voters in California, Arizona, Nevada, Massachusetts and Maine will all be voting on legalizing weed for recreational use.
Of course, investors of weed stocks will be watching California closest of all.
California made history by becoming the first state to legalize medical marijuana way back in 1996. Not only is California’s economy the largest of any U.S. state, it has 53 House of Representative members. These Congressmen could prove critical in the campaign for federal marijuana legalization.
Marijuana stocks have a lot riding on the federal legalization movement. Today, 25 states and the District of Columbia have legalized medical marijuana in some form. Four states (Alaska, Colorado, Washington and Oregon) have legalized recreational marijuana use as well.
Why Would The 2016 Elections Impact Marijuana Stocks?
If California and the majority of the other states voting on the issue in the 2016 elections approve legal marijuana, it will up the pressure on Congress to discuss federal legalization.
Earlier this year, the Drug Enforcement Administration (DEA) denied requests to change the classification of marijuana to clear the path for possible federal legalization. Marijuana is currently classified as a Schedule 1 drug, alongside heroin and LSD.
If marijuana is ever legalized on a federal level, the size of the legal marijuana business will be staggering. Earlier this year, Ackrell Capital projected that the U.S. marijuana market will be worth $100 billion by 2029.
However, if California and other state voters reject legal marijuana in the 2016 elections, the federal legalization movement will lose its short-term momentum.
Investing In Marijuana Stocks Is Tricky Business
While investors wait for potential federal legalization, U.S. weed companies remain in limbo. Even in states that have legal marijuana, operating a marijuana business is still a federal crime. In that sense, many large, reputable pharmaceutical and agricultural companies are not touching marijuana with a 10-foot pole.
Instead, investment options include only a handful of biotech companies like GWPH and INSY working on marijuana-related drugs, as well as sketchy OTC-listed marijuana stocks with questionable management and loose regulatory oversight.
FINRA has repeatedly warned investors of “potential for fraud” when investing in OTC-listed marijuana stocks.
To make matters worse, the majority of marijuana stocks are down more than 70% in recent years.
Marijuana agriculture stock Terra Tech has been one of the exceptions to the trend. Despite its OTC listing, TRTC is up nearly 50% in the past two years.
GW Pharmaceuticals is another, up more than 55% both on positive drug developments and buyout potential.
However, if other marijuana stocks want their businesses to pay off in the long-term, they need the 2016 elections to deliver some good news for the marijuana movement.
As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities.
