Let’s talk about Cannabis

April 20th makes stoners around the world giggle with delight.

Half Baked Yes GIF

If you want to understand why we suggest a quick Google search.

A market once dominated by tie-dye shirts and Grateful Dead fans now has boardrooms and high-profile investors.

17 states fully legalized recreational marijuana with another 7 approving medical usage.

That means over half the states have some laws on the books in direct violation of federal statutes.

But change IS coming.

Resistance crumbles

Polling consistently shows that over 2/3rds of Americans support fully legalizing marijuana.

At a time when we can’t agree on anything, that’s pretty astounding.

President Biden wants to decriminalize it at the federal level. Yet, he has stopped short of supporting full legalization.

Chances are, if a bill was brought to the floor, it would pass both chambers of congress pretty easily. And then Joe would have to make a tough decision.

Why change is imminent

Study after study shows the War on Drugs initiated by the Nixon administration has been an utter failure.

It led to mass incarcerations and exacerbated socioeconomic and racial disparities without lowering drug availability or usage.

So far, results from states legalizing marijuana have been positive.

A study done by the Tax Foundation shows how states like Colorado brought in over $307 million in 2020.

Worries about increased drug use amongst teenagers appear to be offset by declining usage rates overall.

None of this even touches on the benefits delivered to cancer, PTSD, and other patients who used it medically.

BUT THE MAIN REASON for change boils down to the general philosophy of U.S. governance…

Personal choice.

We aren’t saying marijuana isn’t or can’t be dangerous.

What we are saying is Americans put their risks in the ballpark of alcohol (not that they’re equivalent).

And as two previous prohibition amendments show, we value our ability to choose.

What to expect

Cannabis-related stocks like Tilray (TLRY), Canopy Growth (CGC), Aurora Cannabis (ACB), and the like carry enormous potential.

The question isn’t whether they’re in the right industry.

It’s whether management is competent.

It turns out that being Mcgeyver savant able to craft a bong from anything doesn’t make you a good CEO.

Constellation Brands (STZ) forced Canopy Growth to restructure two years ago after abysmal results.

Aurora Cannabis got slapped with a class-action lawsuit in 2019 for a variety of management-related issues.

Ohh, and that’s not to mention that several facilities caught fire or straight-up exploded.

The industry is in its infancy and needs to find itself. Until marijuana becomes fully legalized at a national level, these companies aren’t likely to attract and retain top talent.

Our hot take

It’s going to be a while before these become ‘investable’ companies. In the meantime, they make good speculation plays.

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