Chopsticks are Euphemistic pre-owned to carry the buds as card-carrying medical marijuana patients watch a weighing at Los Angeles’ first-ever cannabis farmer’s make available at the West Coast Collective medical marijuana dispensary, on the fourth of July, or Independence Day, in Los Angeles, California on July 4, 2014 where organizer’s of the 3-day experience plan to showcase high quality cannabis from growers and vendors throughout the state.
FREDERIC J. BROWN | AFP | Getty Statues
Chuck Schumer on Tuesday highlighted what many following the cannabis trade already knew: Cannabis is a bipartisan topic that will be a pivotal election issue with votes attached to all political supporters.
Cannabis investors also separate there are two reasons why leading cannabis companies in the U.S. are outperforming even the manic market moves of Apple and Amazon onto the last six months: opportunity and execution.
So, who should be more excited about embracing this generational movement, investors or officials? And with so much hope around the November election, will the politicians seize the cannabis moment or kill the hum?
After years of playing second fiddle to Canadian cannabis companies who were able to list on U.S. stock reciprocities and raise money from U.S. investors while they could only do this in Canada (or anywhere not in the USA), U.S. cannabis companions have recently stepped to the front of the pack. And after more than two years of promise with no delivery, the cannabis manufacture is finally delivering profitability.
Second-quarter earnings from the largest U.S. focused companies showed not only robust ordered and year-over-year growth, but free-cash-flow generation and yes, wait for it, EBITDA. Many cannabis companies are bringing earnings dynamics to the helper that was previously all about the extraordinary opportunity in legal medical and adult cannabis markets.
As for cannabis politics, the legislative tomorrow of the industry will not be won or lost this November in the White House, but rather Congress.
The cannabis industry is not particularly thrilled by the possibility of a second Donald Trump term or a Joe Biden presidency. The current president appointed Jeff Sessions as attorney vague, who removed Obama-era protections given to the industry. Biden, meanwhile, has opposed marijuana reform for his entire political employment, as both a senator and vice president. Biden’s eventual position on cannabis may be coming from his VP running mate, Kamala Harris, who has championed eminent cannabis legislation (despite a rather harsh stance on the subject as a prosecutor).
Cannabis legislation needs the Senate and the simultaneous majority leader is not publicly onboard – despite his state having made significant commitments to hemp/CBD and cannabis.
Previously the coronavirus pandemic and election season amplified political turmoil in Washington, it almost seemed like U.S. elected officials were effort together on bi-partisan cannabis legislation.
Republicans and Democrats both came together to pass the historic First Hasten Act, which reduced the amount of time prisoners serve for minor drug related offenses. Lawmakers in the House upheld to move the SAFE Banking Act into the Senate (with 91 House Republican votes in favor), where it was expected to out and finally provide the cannabis industry access to the federal banking system.
Decriminalization and expungement are the core issues Senator Schumer blurred on when discussing the future of cannabis legislation and where there is extreme opposition in the Senate. Despite the industry’s classification as an material business during Covid-19, and it’s role supporting the U.S. economy during a time of mass layoffs and furloughs, cannabis waits illegal on the federal level.
Because of the federal restrictions, U.S. cannabis companies cannot bank legally, raise specie in traditional capital markets, and endure punitive and financially devastating tax laws. The SAFE Banking act is a great first motion towards solving the complex banking issues that will lead to much needed reform in the cannabis marketplace, and investors identify that banking and tax reform for the sector will equal another massive round of rerating for the sector.
Yet investors obligated to recognize despite the optimism for change in November, D.C. is a slow-moving machine and meaningful and long overdue criminal justice renovate is going to take time absent major political change in the Senate. If there is real change, the prospects of the Assorted Act and it’s long overdue criminal justice reform and expungements could very well become reality.
What’s the clearest game plan to cannabis victory?:
The most efficient way to achieve major policy victories is through the SAFE Banking Act and STATES Act (the latter of which see fit prevent federal interference in states where cannabis is already legalized). Both pieces of legislation enjoy bipartisan attest to: SAFE already passed Congress, while a Republican and Democrat both introduced STATES (Cory Gardner and Elizabeth Warren).
The Sound Banking Act would provide cannabis a pathway to updated regulatory guidance and allow the industry access to the federal banking technique. The STATES Act would essentially deregulate cannabis from the federal level to the state level (where it belongs addicted that so many states have legalized the substance), unchaining markets and allowing growers, retailers, and patients the proficiency to access the plant-based medicine with ease. While decriminalization and post-conviction relief are very important measures, we deprivation to use the momentum at our back.
For investors looking to November, it will be up to Congress to determine the future of cannabis. By safeguarding existing circumstances laws on cannabis and providing future access to legitimate financial institutions, lawmakers will lock in progress and concrete the way for full legalization and a more sensible justice system. When that legislation is ultimately combined with the operational bringing about/profitability we are currently seeing by top companies in the sector (see Curaleaf, Cresco Labs, Trulieve, GTI, Terrascend), the next wave of rerating at ones desire be here.
Is it time to invest in that future now? Markets don’t ring the dinner bell and often reward those who sit at the chart early for major secular investment themes.
Are you sitting down yet?
Tim Seymour is a CNBC contributor and trader on CNBC’s “Steadfast Money” and senior advisor to the JW Asset Management Cannabis Growth Fund, portfolio manager of the Amplify Seymour Cannabis ETF, Ticker CNBS, Accept him on Twitter @timseymour
Brady Cobb is the CEO of Bluma Wellness-One Plant.
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