By Nick Giambruno, chief analyst, Crisis Investing
While the world remains distracted with the COVID-19 hysteria, almost nobody has noticed that the stars are aligning for the ultimate cannabis catalyst…
The federal legalization of cannabis could be imminent, and the implications are profound.
I’m convinced President Trump has no choice but to legalize cannabis at the federal level, and that he will do so before the presidential election on November 3.
Specifically, I think Trump will legalize medical marijuana at the federal level and then leave it up to the individual states to determine the legality of recreational cannabis.
Reason #1: Trump’s Best Opportunity to Win Over Biden Voters
According to the most recent Gallup poll, 66% of Americans are in favor of legalization. By contrast, the Canadian government fully legalized cannabis in 2018 when it had the support of 68% of Canadians.
Support is at an all-time high – since polling began about 50 years ago – and shows no sign of slowing down.
Perhaps the most drastic change in recent opinions has come from Republicans.
Here are just a few examples…
A majority of Republican voters now support cannabis legalization.
Former Republican Speaker of the House John Boehner was previously “unalterably opposed” to legalization.
He then joined a cannabis investment company.
The current Republican Senate Majority Leader, Mitch McConnell, led the charge to legalize hemp.
The Republican Party of Texas voted to support decriminalization. Oklahoma has also softened its cannabis laws. Socially conservative Utah legalized medical marijuana.
If legalization is happening in even these deeply conservative states, it can happen anywhere.
Here’s why it matters.
There is now no political downside for a Republican to support cannabis legalization.
It’s an enormous political development that was unthinkable just a few years ago.
Supporting cannabis legalization is an opportunity for Trump to win over Democratic voters ahead of the 2020 election. He’d be foolish not to take it. It’s all upside and no downside.
Reason #2: Trump Supports States’ Rights
Cannabis legalization has already passed the tipping point. A growing majority of states have already legalized cannabis in some form.
As we can see in the graphic below, 33 states (plus Washington, DC) have legalized medical marijuana. And 11 states (plus DC) have approved recreational use. A handful of others have decriminalized or otherwise softened their cannabis laws.
Thirty-three states, plus Washington DC, have legalized medical marijuana
There is more to come.
Lawmakers in Minnesota recently unveiled a bill to legalize recreational cannabis.
New Jersey will vote on recreational legalization in the November elections.
Cannabis legalization could also be on the ballot this fall in Arizona, Mississippi, South Dakota, and other states.
Also, in many of the states that have or will legalize cannabis, the tax revenue will exceed that of alcohol and tobacco. In other words, cannabis is already a permanent part of many state budgets.
Here’s the bottom line.
Trump insiders have explicitly stated that Trump is in favor of letting the states decide the issue. In other words, federal legalization.
Reason #3: Jobs, Jobs, Jobs
The US legal cannabis industry is too big to shut down. There’s simply too much money and too many jobs at stake.
Big Business has already entered the legal cannabis market, including most big alcohol and big tobacco companies, among others.
In the US, legal cannabis is already a $17 billion industry – roughly the size of the US coal industry – and it could easily double (or more) in the years ahead.
According to Forbes, the US legal cannabis industry employs 300,000 full-time workers directly and indirectly. By contrast, the US steel industry employs 268,000 people.
Full-time US cannabis workers rose 44% in just the last year. It’s one of the fastest-growing industries in America today.
Even with the economic shutdown, the growth of cannabis jobs shows no sign of slowing. Most states have declared cannabis businesses to be “essential” operations that can remain open during the lockdown.
These full-time cannabis jobs are quality jobs. Also from Forbes:
Professional and technical workers, such as accountants, lab workers, marketers and tax experts, make up more than half of the new workforce. That’s led to a median annual salary of $58,511, almost 11% higher than the overall US median.
Amid the biggest economic crisis since the Great Depression, the last thing Trump would want to do is go after the legal cannabis industry.
I think Trump will do the opposite and turbocharge this flourishing industry by legalizing cannabis at the federal level. It likely would instantly create hundreds of thousands of quality American jobs, and possibly many more.
Reason #4: Cannabis Will Help Trump Tackle the Opioid Crisis
Drug overdose deaths are now the No.1 cause of accidental death in the US.
Overdoses kill more Americans than gun violence and car accidents combined.
About 66% of these overdose deaths are from prescription opioids.
President Trump has acknowledged the situation and declared the opioid crisis a “national public health emergency.”
It’s no secret cannabis has incredible medical benefits, including effectively treating chronic pain.
In many cases, cannabis is a much safer alternative to using opioids.
There is less potential for addiction, it’s impossible to overdose, and cannabis helps treat withdrawal symptoms.
If Trump is serious about fighting the opioid crisis – and I think he is – he should legalize medical cannabis at the federal level.
Reason #5: If Trump Wants to Put “America First,” He Must Legalize Cannabis
In 2018, Canada made history when it became the first large, industrialized, Western nation to legalize recreational marijuana.
One Canadian cannabis executive called US prohibition “a gift to Canada.”
What he meant by that is, thanks to US prohibition, Canada was getting a leg up on this lucrative new global industry.
Further, Mexico’s Supreme Court has legalized cannabis and ordered the Mexican government to craft a regulatory framework by December 15 of this year.
Countries with legal cannabis now surround the US, as the map below shows.
North American jurisdictions with legal recreational cannabis
Source: Washington Post
Unless the federal government acts quickly, every country in North America except the United States will have legal cannabis markets worth hundreds of billions of dollars.
I don’t think President Trump will be happy to see Canada and Mexico eat the US’ lunch.
Trump legalized hemp at the federal level in 2018. A big reason for it was because the US was essentially subsidizing the hemp industries of foreign countries by prohibiting its domestic production.
The same logic that Trump applied to hemp in 2018 applies to the overall cannabis legalization.
If Trump is serious about putting “America First” – and I think he is – he’ll legalize cannabis at the federal level.
This is a long-term story that will culminate in the global legalization of cannabis and the emergence of new industries worth hundreds of billions of dollars. It will make investors in the right companies rich in the process, too.
Chief Analyst, Crisis Investing