From demands for research-grade cannabis, to huge marijuana tax revenues, the reasons for legalization keep coming … and why that means you need to be invested now

Thirty members of Congress just turned up the heat on the federal government, wanting a faster turnaround time for approving federally authorized marijuana growers.

The core issue involves research-grade cannabis.

You’ve likely read reports about the medicinal benefits of marijuana, or perhaps the therapeutic qualities of CBD. Well, where is the marijuana coming from?

When the data is published by our federal agencies, like the DEA, the marijuana is likely coming from federally authorized marijuana cultivation facilities. And herein likes the root of the problem …

As I write, there is just one federally authorized facility at the University of Mississippi. Beyond the bottleneck issue, the Mississippi facility has been criticized for produced a strain of marijuana that doesn’t chemically resemble the marijuana that’s being sold and consumed in the states where it’s legal.

***Enter 30 frustrated members of Congress, including three presidential hopefuls, wanting change …

This past Tuesday, these representatives sent a letter to the Justice Department and the DEA, imploring officials to speed up the approval of new marijuana facilities.

The bipartisan letter, led by Reps. Eric Swalwell (D-CA), Matt Gaetz (R-FL) and Steve Cohen (D-TN), claims federal agencies have ignored previous requests for pending application information. The letter also explains the need for more research-grade cannabis manufacturers.

From Marijuana Moment:

“The application process to research cannabis is one that is arduous and long,” the lawmakers wrote, noting that cultivating cannabis for federal research purposes requires DEA approval and coordination with the National Institute on Drug Abuse and the Food and Drug Administration.

The result is that researchers interested in studying marijuana “wait months or even years to have their applications approved” and “then they have to deal with raw materials that do not always lend themselves to proper research.”

Matt McCall, our resident marijuana expert, referenced this DEA issue in his most recent issue of Investment Opportunities. He highlights the growing pressure for federal reform given the current status of state legalizations for medicinal purposes.

From Matt:

Marijuana remains a Schedule 1 drug in the United States, which is one reason it is illegal. According to the Drug Enforcement Administration (DEA), Schedule 1 drugs are generally unsafe with a high potential for abuse and no accepted medical use.

More and more studies refute all three of those criteria when it comes to marijuana. The last qualifier — no accepted medical use — is now known to be simply false.

Which brings us to the very odd dynamic of 33 states now allowing medical marijuana at a time when the federal government says it is illegal …

What will it take for the DEA to remove marijuana from Schedule 1?

… more studies demonstrating the positive medicinal effects of marijuana.

This is yet another silly situation because government regulations make it extremely difficult to perform those studies.

Matt’s comment is illustrative of the bottleneck in Mississippi.

Fortunately, this time around, reform efforts have the support of Attorney General, William Barr. Last month, he expressed interest in expanding cannabis facilities, and noted that he believes it’s very important to get additional marijuana suppliers.

***Meanwhile, a recent report from Barclays highlights another reason we’ll continue seeing the marijuana legalization trend continue — tax revenues

Last week, CNBC reported on a Barclays study pointing toward a huge carrot dangling in front of state governments willing to enact marijuana reform — money.

Barclays estimates that if legalized today, the total U.S. cannabis market would be worth $28 billion, increased to $41 billion by 2028. At $41 billion, the market could generate nearly $28 billion of tax revenues across all levels of government, if taxed at the same level as tobacco.

According to the report, which studied Colorado, Washington, and Nevada (where marijuana is legal), tax revenues from marijuana are already higher than alcohol tax revenues. Even more impressive, in Colorado, they’re already higher than tobacco tax revenues. Here again, Matt McCall has already highlighted this dynamic to his subscribers. From his May issue of Investment Opportunities:

Good or bad, right or wrong, many decisions are made based on money. When it comes to marijuana, the dollar signs are too big to ignore.

The amount of tax revenue that states could generate from legal marijuana is impressive. And when politicians of one state watch neighboring states bring in revenue, it puts pressure on them to get in on the action. Thus, the snowball effect of more states legalizing marijuana …

All states would love to have hundreds of millions in additional revenue. Again, not all decisions should be based on money. But, when something makes overwhelming sense from a financial standpoint, it will help garner more support.

The article from CNBC which featured the Barclays report, goes on to note how U.S. marijuana companies are currently jockeying for position with the expectation that marijuana will be legalized across the nation.

Of course, this too comes as no surprise for Matt’s readers. He’s been detailing reasons why this will happen for months.

***Here is how you can take advantage as an investor before legalization occurs

As we quoted Matt in Monday’s Digest, timing is critical:

Please don’t wait until the major news outlets run stories about legalization. Don’t wait until your neighbor and co-worker are talking about legalization. And definitely don’t wait until legalization is a done deal.

The really big money is made by investors who are able to buy early. My entire investment career has been about this. Buying ahead of the legalization of marijuana could be one of the best investments you make in your life.

As an illustration of this, last week, Entrepreneur featured a guest article from the CEO of a CBD company. While the article focused on the explosive growth of the CBD industry (and pointed toward why it’s going to continue), there was an interesting detail …

The CEO referenced the passage of the 2018 Farm Bill this past December, which legalized hemp, which is used to make CBD. He noted that in the 30 days following the Farm Bill’s passage, his company’s revenues jumped 35%.

While these “before-and-after” events can be big for a company’s revenues, they can be massive for a company’s stock price.

To illustrate, let’s stick with the Farm Bill and CBD.

In early December, Matt recommended his subscribers buy a small, Australian CBD company called Elixinol, trading at just $1.50. This was a few weeks before passage of the Farm Bill. Since that timely recommendation, Elixinol has soared 142%.

Now, yes, an investor could have staked a position in Elixinol in the weeks to follow and still be sitting on impressive gains. But the broader point remains — getting in before watershed moments is how investors make the big dollars. And with the biggest watershed moment of all still in front of us — federal legalization — that means we still have the chance to get in before the biggest gains.

Matt’s current focus is on small marijuana companies that are poised to climb like Elixinol. If you’d like to learn more, click here.

We’ll continue to keep you up to speed here in the Digest.

Have a good evening,

Jeff Remsburg