When the presidential election occurred in 2016, it was big news for the cannabis industry. While President Trump was not himself a proponent of cannabis, many states chose to legalize marijuana. In total, eight states passed legalization measures for marijuana. As we approach another election season, analysts are hoping that more states will legalize marijuana. This would be big news for many U.S. marijuana stocks like Green Thumb Industries Inc. (OTC:GTBIF) and Harvest Health & Recreation Inc. (OTC:HRVSF).
Other pot stocks that have a big role in the U.S. like GW Pharmaceuticals Inc. (NASDAQ:GWPH) and Insys Therapeutics Inc. (NASDAQ:INSY), have a lot to gain from this legislation as well. As of September 2020, there are 33 states that have legalized marijuana for either medicinal or recreational use. Of those, eleven have adult-use cannabis. One of the major things that the industry has going for it believe it or not is Covid. The effects of Covid have meant that states have deemed cannabis businesses to be essential during this time. This means that there is more legitimacy in the cannabis industry than ever before.
What Legalization Could Mean for Marijuana Stocks
If there are a large number of U.S. states that approve cannabis bills, it would be big news for the industry. Karen O' Keefe, director of state policies for the Marijuana Policy Project, stated that "we've seen public support continue to grow every year." The states that have legalized cannabis, have reported seeing record tax revenue. This tax revenue can then be used for everything from education to public infrastructure and more. Marijuana stocks like Charlotte's Web Holdings Inc. (OTC:CWBHF) could see a major boost, as legalization would have obvious positive impacts in the cannabis industry.
The states that have marijuana on the ballot this season include Arizona, New Jersey, South Dakota, Montana, and Mississippi. While these industries may not be major as of yet, they do offer a lot of future potential for investors to capitalize upon. In addition, we have seen several small statewide cannabis industries, grow to substantial amounts in the past few years. If we do see these states legalize cannabis, it would be a major step forward in getting marijuana legalized at the federal level. Either way, this is big news for the cannabis industry and the marijuana stocks within it.
How to Hedge Our Marijuana Stock Bets on Future Legalization
When it comes to investing in the potential of the cannabis industry, there are a few ways to go about it. The most obvious is investing in pure-play pot stocks. These are companies that produce cannabis to be sold wholesale. These pot stocks tend to be the most volatile, which can be a positive for some.
Next, we have ancillary and pharmaceutical pot stocks. These companies carry less volatility, but the upside potential is also lessened when compared to pure play companies. Both of these options have a lot of factors within them that could lead to success. It all depends on how much research the individual investor is willing to do. But, with positivity surrounding the cannabis industry at an all-time high, this election season looks like it will be an exciting one.