What’s next for the cannabis industry?
The legal cannabis industry has come a long way the past 2 years culminating in US Federal legislators considering the decriminalization of cannabis use in the USA. In this article, I take a look at what’s been happening in cannabis as well as the steps ahead for cannabis to become decriminalized at the national level in the USA.
The US House Committee approves a landmark bill legalizing marijuana at the federal level
In mid November 2019 the US House Committee approved the new cannabis bill. If successful, the bill would have the effect of removing cannabis from Schedule 1 of the Controlled Substances Act. This will also mean the states can still enact their own policies, but can now clear criminal records of people with low-level marijuana offenses. This is quite significant as marijuana arrests account for more than half of all drug arrests in the United States. Included in the legislation will be a 5% tax on cannabis products that would provide job training and legal assistance to those hit hardest by the so called war on drugs.
“The criminalization of marijuana has been a mistake,” Chairman Rep. Jerrold Nadler, D-N.Y, has stated in commenting on the House Judiciary Committee bill that legalizes marijuana on the federal level.
The bill will still need to pass a vote in the full House before moving to the Senate for further approval. However, the legislation may face a tougher battle in the Republican controlled Senate, where majority leader Mitch McConnell opposes marijuana legalization. Concern has been expressed by some republican members that the bill has gone a bit too far and will unlikely be passed at the senate level.
Get our daily investorintel update
The bill has more than 50 co-sponsors including presidential contenders Elizabeth Warren, Kamala Harris and Cory Booker. Even Joe Biden has added his thoughts to the topic in saying that not “enough evidence” exists to prove whether marijuana is a “gateway drug”. And according to the National Institute on Drug Abuse, research is saying the majority of people who use marijuana do not “go on to use other ‘harder’ substances.”
Legalizing cannabis has become a global movement following Uruguay and Canada’s move
Cannabis is already legal for recreational use in 11 US states, and for medical use in 33 states
So far 11 states in the U.S. and the District of Columbia have legalized cannabis for recreational use whereas medical cannabis, prescribed by physicians, is legal in 33 states and Washington, D.C. The National Organization for the Reform of Marijuana Laws has called the legislation the “biggest marijuana news of the year.”
The recent bill approval comes a few months after the House passed legislation that protects banks, credit unions and insurance companies in doing business with marijuana sellers serving marijuana businesses in states where the substance is legal. In addition, the act will provide protection from criminal liability to the financial services providers for providing services to cannabis-related businesses, as long as the business is in compliance with state law.
President Trump probably will end up supporting the cannabis bill
President Trump has not given much away and recently stated: “We’re going to see what’s going on. It’s a very big subject and right now we are allowing states to make that decision. A lot of states are making that decision, but we’re allowing states to make that decision.” Another recent report on Trump’s view stated: “President Trump appears to be all in on the bill. Before jetting off to the G-7 summit in Canada, he told reporters,” I support Senator Gardner. I know exactly what he’s doing. We’re looking at it. But I probably will end up supporting that, yes.”
Legalization of cannabis in Canada completes one year now
Canada has just celebrated its first anniversary of legal recreational use of cannabis. By way of a product upgrade, the governing body overseeing and regulating cannabis sales, Health Canada, is now accepting applications from companies seeking to produce cannabis derived goods such as edibles, beverages and vaping products. The edibles/beverages/vape market is projected to be a billion dollar boom for Canada’s burgeoning cannabis businesses.
Fancy some cannabis infused chocolate
US farm bill legalized hemp
Also in the last 12 months US President Trump signed into law the farm bill, which contained a provision legalizing hemp, a species of cannabis that CBD can be extracted from but that isn’t psychoactive. Hemp has typically been used for industrial products like paper and textiles. Again the hemp market can easily grow to be a multi-billion dollar global market.
Other countries that may legalize cannabis next
Apart from the US, the following countries are all likely to legalize cannabis, especially if the US does. Those countries are Jamaica, Czech Republic, Colombia, Peru, The Netherlands, Portugal, Spain, Iceland, and France. Another one is Australia where last month the capital city of Canberra legalized cannabis use. Mexico will also likely follow soon where personal use of recreational cannabis in amounts 5 grams or less is decriminalized (not a jailable offense). In fact, most of South America considers smoking cannabis no big deal. Even Russia allows cannabis in amounts up to 6 grams.
All of this good news for the cannabis sector the past 2 years has seen cannabis stocks do very well, despite some ups and downs.
One company we follow at InvestorIntel that can ride the wave of cannabis legalization is FinCanna Capital Corp. (CSE: CALI | OTCQB: FNNZF). FinCanna provides financing to top-tier companies in the licensed medical cannabis industry in exchange for a royalty on revenues by building its diversified portfolio of royalty investments in scalable, best-in-class projects and companies in U.S. legal states, with a focus on California. If the US cannabis bill gets passed into law it could be a big boost for FinCanna.
Attitudes have been changing towards a drug where users were once thought of as hardcore criminals. There is now more information out there on cannabis than there was when Congress passed the first law effectively criminalizing marijuana in 1937 and then passed another law in 1956 that set mandatory prison sentences for drug-related offenses which included marijuana.
Cannabis has gone from being a criminalized drug to being on the verge of a multibillion-dollar global boom. We will watch with interest to see if the US follows Uruguay and Canada’s lead to legalize marijuana at the Federal level, most likely in 2020. If successful the devil will be in the detail, as decriminalizing and legalizing can mean two different things. If the US does move it is hard to see why the rest of the world would not follow. This would mean a decade long boom ahead for the global cannabis industry.
Matthew Bohlsen is a Senior Editor for InvestorIntel.com. With a Graduate Diploma in Applied Finance and Investment, and a Graduate Diploma in Financial Planning. He ... <Read more about Matthew Bohlsen>