There’s something in the air right now, and the holidays haven’t even arrived.
Last week, I told you how the powerful House Judiciary Committee was poised to approve new legislation that would effectively legalize cannabis at the federal level.
On Wednesday, Nov. 20, it happened.
The committee voted 24-10 to advance the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act. Introduced by House Judiciary Committee Chairman Rep. Jerrold Nadler of New York, the bi-partisan MORE Act became the first bill of its kind to pass through a Congressional committee.
Let me explain what this means and why buyers came flying in …
Outstanding individual stocks in the sector have done much better. One of the largest companies in the industry, Canopy Growth (NYSE:CGC). It rallied 56%over the same timeframe. Cannabis stocks exploded on the news. The industry bellwether, ETFMG Alternative Harvest ETF (NYSEARCA:MJ), popped 19% from Tuesday’s low to Thursday’s high.
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And now we’re one step closer to the ultimate catalyst that could send cannabis stocks soaring to historic highs.
I’m talking about full legalization within the United States, the world’s largest cannabis market.
With the MORE Act, we’re seeing the dominoes stacked against legalization starting to fall, one after the other. And the profit potential is only growing stronger.
The bill would introduce a 5% federal tax on cannabis sales. And the revenue would be used to fund job training, legal aid for people who’ve been impacted by prohibition, and small business loans for those who are socially or economically disadvantaged.
The MORE Act also seeks to lower some of the barriers to licensing and employment in the industry and would prevent federal agencies from denying public benefits or security clearance because of people’s cannabis use.
The next step for the bill is to pass through other House committees and then move on to a full vote on the House floor, where Democrats are the majority and likely to vote in the affirmative, particularly during presidential election season. It’s fate in the Senate is cloudier, but it’s too early to count out the possibility of full legalization.
This a truly exciting time to be a cannabis stock enthusiast. And there’s a whole lot more than the MORE Act that’s lining up in our favor.
The Legalization Trail
Earlier last week, I mentioned that the House approved the first standalone reform bill in its history — the Secure and Fair Enforcement (SAFE) Banking Act, which would allow banks to have cannabis companies as customers. Right now, banks fear they’ll violate federal law by taking on legitimate cannabis business clients.
The American public’s attitude toward cannabis has also been changing, too. New polling data from the Pew Research Center shows 67% of Americans now back legalization, up from 62% just last year. Opposition has fallen to 32% from 34%.
The bottom line is that support for cannabis legalization has never been higher.
Already, 47 states, three territories, and Washington D.C. have legalized cannabis in some form or fashion.
The states are where the whole legalization movement took off. And that momentum has not let up.
On January 1, cannabis sales in Illinois will get underway. State officials have already approved 22 licenses for dispensaries to operate. Illinois has the potential to develop into a $2.5 billion market and a hub for cannabis in the Midwest.
Michigan will be close behind, with the state expected to start accepting dispensary licenses by the end of 2019. Already, about 3% of Michigan adults have a medical marijuana card, a higher rate than many other markets. Brightfield predicts the recreational market in Michigan could reach $650 million by 2023.
Voters in New Jersey will get to decide on a cannabis recreational legalization measure in the state during next year’s general election. Such a market could be worth up to $1.2 billion by 2025, according to New Frontier Data.
Rhode Island Governor Gina Raimondo said she’ll make an attempt at recreational legalization in the state in 2020 as well. In an interview, she discussed what she perceives as the inevitability of legalization in nearby states like Connecticut.
New York state is in the mix, too, as its governor and others in the Northeast states recently met to discuss the possibility of coordinating legalization efforts.
Even Virginia lawmakers have already filed a bill to decriminalize cannabis in the state next year.
The bottom line here is that cannabis companies could soon see billions more in revenue coming in over the near term. For the best firms in the business, this could translate into serious revenue generation. For investors bold enough to act, this could translate into life-changing profit potential.
The deep discounts for many choice cannabis stocks — like the ones I recommend to my Investment Opportunities and Early Stage Investor subscribers — are more tantalizing than ever.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.