The last major obstacle for marijuana legalization is federal reform … but overcoming it is closer than ever before
In 2018, investors sunk $10 billion into the North American legal marijuana industry. It was a 100% increase from just three years ago. Analysts suggest we’ll see that number rise another 60% in just 2019 alone — a new investment influx of $16 billion.
Simply put, the marijuana industry is experiencing massive growth.
For weeks, my colleague, Luis, and I have been bringing you updates on this trend.
Regular readers know that we believe legal marijuana is one of the biggest investment opportunities of this generation. A new wave of legalization has already — and will continue to — create new markets and massive stock winners.
In this Digest, I want to put a key issue on your radar that will have huge ramifications. It’s a critical piece of the marijuana story because when resolved, it could lead to the industry doubling practically overnight.
Briefly recapping where we are today, 33 states have legalized medical marijuana and 10 have approved it for recreational use. In 2018, we saw U.S. drug regulators approve the first marijuana-based pharmaceutical … there was the passing of the U.S. Farm Bill which legalized hemp … huge companies like Constellation Brands invested in fledgling marijuana companies … and acceptance of marijuana grew to the point that even Coca-Cola flirted with the idea of getting into the cannabis business.
***Despite this growth, there’s one major headwind facing legalized marijuana — the U.S. government
Marijuana is still illegal on the federal level. In fact, the feds treat marijuana as a controlled substance equal to heroin.
Now, you might read that and say, “Well, what does that matter? Marijuana stock-prices are climbing. States are legalizing. So what impact does the federal government have anyway?”
A huge impact.
You see, with marijuana still illegal under federal law, getting banks to accept deposits from marijuana-related companies is extremely difficult. That’s because any bank that does business with marijuana companies could be charged with “aiding and abetting” — which is a federal crime.
As a result, cannabis companies have had little choice other than to deal mostly in cash. This presents huge safety issues — think delivery drivers, distributors, and dispensaries, all holding huge amounts of cash — leading to an increased risk of burglaries.
But the bigger issue is really scale. First, our society (and the world, for that matter) is increasingly cash-less. This means that in order for the marijuana industry to make its next quantum leap, banks need to be in on the game. But the movement also needs federal reform because insurance companies are nervous to get involved with marijuana companies too. Even some landlords won’t lease to cannabis companies out of fear of federal repercussions.
In other words, there’s a federal bottleneck. And when reform finally happens, the impact will be huge. The CEO of the marijuana company greenRush estimates that allowing customers to buy using debit and credit cards could increase business growth by 50%-100% overnight.
***So, how close are we to federal reform?
A huge obstacle to reform was Texas Congressman Pete Sessions, chairman of the House Rules Committee. While former Attorney General Jeff Sessions received most of the blame for impeding marijuana reform, it was actually Pete Sessions who was most responsible by denying votes on marijuana-related amendments.
Now that Sessions lost his seat to Democrat Colin Allred, more progress is coming. As Politico reports …
With Pete Sessions gone, and Democrats in charge, the backlog of small-bore changes that marijuana advocates have been clamoring for since 2016 — clarification of banking rules; permission for veterans to talk to their VA doctors about medicinal marijuana; protections against federal interference for state-legal programs (medical and recreational) — are all due to appear in upcoming appropriations bills.
Two hundred and ninety-six members of Congress (68 percent) represent the 33 states with at least medical marijuana, which means the votes are there to pass these amendments. In the words of Rep. Earl Blumenauer, the Oregon Democrat who is the dean of the Cannabis Caucus: “Cannabis reform is inevitable.”
The most significant of the reform efforts comes through H.R. 420 — the “Regulate Marijuana Like Alcohol” Act. Its passing would remove marijuana from the list of most dangerous drugs.
Keep your eye on this. If it passes, the impact on the marijuana industry will likely be enormous.
***Even without federal legalization, marijuana stocks are making huge gains
Matt McCall, our resident marijuana expert and editor of Investment Opportunities, has been positioning his readers for gains in marijuana. Over the last two weeks, we’ve brought you news from one stock in particular that has been in the headlines — Canopy Growth. As I write, Matt’s subscribers are up 43%.
But Canopy isn’t the only marijuana stock doing well for Matt’s readers. There’s also Elixinol Global, up 42%, and Innovative Industrial Properties (an innovative REIT that leases facilities to growers). It’s up 66%.
Matt’s been setting his subscribers up for gains like this with the help of his Cannabis Calendar. It’s a tool that tracks the IPOs of the marijuana companies that Matt believes are likely to see massive growth.
Getting in at (or close to) a marijuana IPO price can be incredibly lucrative. For example, Tilray IPO’d at a price of $17 per share. As I write, it’s trading at about $76. That’s a gain of nearly 350% … since July.
Matt is revealing his next Cannabis Calendar pick for his Investment Opportunities subscribers today. To learn more, click here. In any case, keep your eyes on H.R. 420.
***A new exciting partnership points to growth for solid state batteries
Regular readers know that Matt isn’t just our marijuana expert. In his Investment Opportunities newsletter, he tracks a handful of massive trends that are reshaping our world — and setting up well-positioned investors for major gains in the process.
There’s the (IoT) Internet of Things (our computers and appliances basically “talking” to each other, transferring data and information without our involvement, all so that our lives run smoothly and effortlessly) … there’s electric and self-driving cars (the future of how we’ll drive will be transformed in the next few years) … and then there’s 5G (the next evolution in internet connectivity will be blazing fast and able to support amazing new technological breakthroughs) …
All of these trends are connected in one sense. They require the same thing to power them — batteries.
As Matt wrote to his subscribers earlier this month …
(The trends just mentioned) will require one specific thing in order to connect and function properly — batteries. Specifically ones that are compact, have a long battery life, can hold up in high temperatures, and are able to operate in volatile situations.
(The trends just mentioned) currently use lithium-ion batteries, but these kinds of batteries come with dangerous risks. That’s where the solid state battery comes into play. The solid state battery is the answer to every concern related to the future of (the IoT, electric cars, and 5G).
Yesterday came news that Toyota and Panasonic are launching a joint venture to make electric vehicle batteries, while exploring solid state battery development …
Toyota and Panasonic will also reportedly work together to develop next-generation solid-state lithium-ion batteries, which are expected to provide increased range with less weight and cost for electric cars. They could also be less flammable to improve safety.
We’re still in the very early stages of the solid state battery trend, but its impact over coming decades is going to be enormous, affecting multiple industries across several investment trends — if you’re unaware of what’s happening, it needs to be on your radar.
Matt has put together a presentation to help investors understand the significance. To watch for free, click here.
Enjoy your evening,