Rejoice, pot stock investors.
The House Judiciary Committee approved a bill yesterday that looks to legalize marijuana on the federal level.
That means no more “Schedule 1” classification – the “most dangerous” of all the drug schedules – which includes the likes of heroin and LSD. Schedule 2 drugs, like meth and cocaine, are (in the federal government’s eyes) apparently less dangerous than marijuana.
The bill passed 24 to 10, and now faces the scrutiny of both the Democrat-led House and Republican-controlled Senate.
In the House, the new legislation is likely to pass. The Senate, however, could be a different story.
Majority Leader Mitch McConnell is famously anti-marijuana, and if he has his way, the pot legalization bill will die on the Senate floor, executed by pot-opposed Republicans (and a handful of bible belt Democrats).
And though the bill might anger the zero-tolerance crowd, the actual specifics of it seem quite reasonable. In layman’s terms, the bill will give states complete control over marijuana-related policies – reflecting the decriminalization of recreational pot use that’s sweeping the nation, state-by-state.
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In addition, states are given incentives by the legislation to clear-off criminal records for folks with low-level marijuana offenses.
That doesn’t sound too controversial, right? After all, conservatives have, by and large, loved the idea of a “states’ rights” focused government.
However, the real sticking point – even though it might not seem like one – has to do with how legalized pot will be taxed.
If approved, a 5% tax will be enforced on the sale of all cannabis products, in an attempt to provide job training and legal assistance to those who committed marijuana-related crimes.
In other words, a small part of every joint sold will go into a “weed welfare” program – combining two things that Republicans typically hate:
More taxes and government programs – particularly ones that provide kickbacks to ex-cons.
The idea of providing job training to drug offenders might be too bitter for McConnell & Co. to stomach, even if it results in pro-states’ rights legislation.
But don’t tell pot stock investors that. Over the last two days, the top cannabis corps. are up big.
Canopy Growth (NYSE: CGC) soared 33% since Tuesday, while Cronos Group (NASDAQ: CRON) surged 16%.
It’s a welcome reprieve for long-term marijuana speculators who have watched their holdings endure vicious sell-offs over the last year. CGC is down roughly 65% since October 2018. Cronos dropped 68% after hitting an all-time high last February.
To pot stock enthusiasts, yesterday’s bill approval was a huge step in the right direction. U.S. federal legalization is the “holy grail” for the marijuana industry.
But if the Senate doesn’t think the new legislation is a good idea, then all the recent excitement will have been for nothing. We still have a long way to go before full decriminalization becomes law, and until that happens, it might be wiser to wait.