With the 2018 midterm elections becoming the next biggest test for the cannabis industry, marijuana stocks have surged slightly in anticipation of the possibility that more states will legalize cannabis consumption in some form or another.
In addition to recent developments such as last weeks Mexico’s Supreme Court ruling the nations cannabis ban to be unconstitutional, cannabis enthusiasts are eager to see if they can score additional wins in the form of new, freshly-legalized markets in the U.S.
Voters in North Dakota and Michigan will be voting for potential full legalization of recreational marijuana use for citizens over 21 years of age, while residents of Utah and Missouri vote on medical marijuana use.
In anticipation of the results, various cannabis stocks have responded optimistically. Cronos Group (TSE: CRON) went up 4.8 percent, Canopy Growth (TSE: WEED) rose by 3.6 percent, while Tilray (NASDAQ: TLRY) went up 5.8 percent.
According to Erik Altieri from the National Organization for the Reform of Marijuana Laws, a D.C. based non-profit, all of these ballot initiatives “have a very good chance of passing,” in his eyes. “Despite the pushback from Attorney General Sessions (or maybe because of), this year has been one of our most successful in terms of support,” he mentioned according to CNBC. “We’ve had more pieces of federal marijuana reform legislation introduced this year than in any other.”
Another analyst on the topic, Vivien Azer, mentioned that Michigan would prove to be one of the most critical arenas for cannabis investors. “Encouragingly, support for cannabis achieved bipartisan support last year and Republican support was up 2 percentage points in 2018 to 53 percent,” Azer said. “Gallup release their new 2018 survey data on cannabis, which showed that 66 percent of Americans now support legalization of cannabis.”
Specifically, if cannabis is legalized in Michigan, individuals would be permitted to own marijuana and marijuana-infused products, along with growing up to 12 marijuana plants for personal consumption. A proposed law, however, would maintain a strict 10-ounce limit for cannabis contained in personal residences, along with that all amounts over 2.5 ounces be secured in a container.
Currently, only ten states in the U.S. allow for recreational marijuana use, while another 32 permit marijuana for medical purposes. However, the legalization of cannabis on the federal level – as is the case in Canada and Uruguay – doesn’t seem to be coming anytime soon.
The U.S. cannabis market has been perceived more optimistically by global investors than the Canadian market. In contrast to the excitement leading up to federal legalization, a bearish plunge overtook the Canadian cannabis market, as investors saw companies struggling to keep up with over-burdening demand in the short term. Many U.S. based cannabis companies, however, have already been profitable in certain states, something that a fair number of Canadian companies have yet to do.
Even more so, some consider the Canadian marketplace to be over saturated with growers, and when coupled with the fact that the U.S. market is potentially ten times larger than that of Canada’s based on population alone, it’s not surprising that new developments in the U.S. are closely watched.