Cannabis investors have been wondering exactly when the U.S. will federally decriminalize Marijuana for a while now. Speculation has been going on for years in regards to the exact timeline, with many having anticipated an announcement on April 20th (4/20, or just 420, a popular number and symbol in the cannabis world). However, it seems that the U.S. will indeed to moving ahead with some sort of legalization after all. Senate majority leader Chuck Schumer revealed to the public a planned piece of legislation that would legalize cannabis across the country.
Although the document is still in its first draft, those backing the bill hope to see what kind of feedback/suggestion the document would garner from the American public. If passed, the new legislation would expunge criminal records of individuals with marijuana possession charges while also implementing an excise tax on marijuana products, similar to what we now have with tobacco and alcohol.
However, the bill still would allow individual states to make their own policies regarding the plant. Considering that around 70% of the American population now supports cannabis legalization, the Biden administration quickly made legalization a pillar of their campaign back in 2020.
“These changes represent a dynamic shift in public opinion and support across the political spectrum. State-compliant cannabis businesses will finally be treated like other businesses and allowed access to essential financial services, like bank accounts and loans. Medical research will no longer be stifled,” read a statement in regards to the new legislation.
Although it’s not yet confirmed, most investors are expecting the new bill to fully allow U.S. cannabis companies to list on public stock exchanges. The largest cannabis companies listed in the U.S. actually operate in Canada. Inversely, U.S. multi-state operators tend to list on Canadian stocks exchanges instead.
It’s a complicated situation due to a difference in legality between the two countries. However, suppose this new bill allows cannabis listings once more for domestic marijuana companies. In that case, we could see hundreds of newly minted cannabis-related IPOs within the weeks following the legislation’s implementation.
Most U.S.-based companies sow their stock prices rise in response to the news. This includes most multi-state operators, companies that have long been forced to look elsewhere for capital. Even private businesses in the U.S. have faced other problems as well, including limited access to payment services and banking. Although U.S.-based cannabis companies are up, most Canadian cannabis stocks were down a little on the news. U.S. legalization is good for the industry at large, but Canadian cannabis producers – which have dominated the capital markets – could face a lot more competition in the upcoming months because of it.
The only hurdle will be passing all the bureaucratic red tape that needs to be circumvented. Although Democrats currently have a majority in Capitol Hill, that doesn’t mean a proposed cannabis bill will speedily pass through the House and Senate. Any legislation will delayed for a while, especially since cannabis isn’t a particularly bipartisan issue. If anything, cannabis investors should expect this piece of legislation to come through sometime around early 2022, if not later.
