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.
Go figure.
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.
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.
