Marijuana: Legal Week-in-Review

When I was 12 years old, my dad took me to the local movie theater to see Woodstock, a 1970 documentary film that blew my little adolescent mind. By the time the lights came up, I had outgrown Disney.

I particularly remember Arlo Guthrie singing a “subversive” song in the movie, about smuggling marijuana:

“Comin’ into Los Angeles
Bringin’ in a couple of keys
Don’t touch my bags if you please, mister customs man…”

And nowadays? As I’ll explain below, even conservative Republicans are warming to marijuana legalization.

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Marijuana legalization is the major tailwind for investments in the sector. It’s my view that a complete lifting of prohibition is only a matter of time, but it’s important for investors to keep an eye on the ebb and flow of marijuana laws.

In the U.S., marijuana remains illegal on the federal level. Medical marijuana is currently legal in 33 states and the District of Columbia. Recreational use is legal in 11 states and DC.

Analysts estimate that an additional 15 states should have legalized medical and/or recreational pot by 2020. Actions on the federal and state levels have the power to dramatically move pot stocks up or down.

This issue, here’s my “week-in-review” of marijuana legal and political developments.

The Federal Level

The Food and Drug Administration (FDA) sent warning letters about cannabidoil (CBD) products to 15 companies and published an updated consumer advisory asserting that “CBD has the potential to harm you.”

The FDA is responding to concerns that many companies are making unsubstantiated and exaggerated claims about the health benefits of CBD.

As the natural foods community embraces marijuana and CBD oil, the marketing of its benefits has become a “wild west” of dubious assertions. The FDA’s latest action reflects the essentially negative stance of the Trump administration toward marijuana.

In another reflection of that cautious tone, Attorney General William Barr decried the epidemic of methamphetamine use and added: “The people who are increasingly using this drug are people who may have been using marijuana.” AG Barr is a social conservative who has repeatedly expressed his reservations about marijuana legalization.

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That said, I don’t expect this anti-marijuana rhetoric to result in tangible federal action against pot. Too much money is at stake, in terms of corporate profits, shareholder returns, and state tax revenue.

On the opposite end of the political spectrum, Sen. Bernie Sanders (I-VT) repeated his pledge to “legalize marijuana in every state in this country,” expunge past records, and assist people hurt by the drug war to participate in the legal industry.

As a candidate for the Democratic nomination for president, Sanders (an avowed Socialist) has staked out a libertarian position on marijuana legalization. One of his rivals for the nomination, Sen. Amy Klobuchar (D-MN), asserted that she supports legalizing marijuana on the federal level.

In an historic watershed, the U.S. House voted in favor of legislation that would lift the federal ban on marijuana. The bill, introduced by House Judiciary Committee Chairman Jerrold Nadler (D-NY), passed by a 24-10 vote in favor.

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Read This Story: Take Heart, Pot Investors: Prohibition Is Doomed

The House bill includes provisions to expunge past criminal records for marijuana violations and would implement a 5% cannabis sales tax. The House vote was just a first step toward a complete lifting of the federal ban

That said, Rep. Steve Cohen (D-TN) expressed pessimism about the chances for marijuana reform in Congress and in his home state of Tennessee.

The State Level

Through passage of a 2016 ballot initiative, Florida became the first Southern state to legalize medical marijuana. Recreational pot remains illegal in the state. However, over the past week, state lawmakers have reiterated their intention to push for full legalization via another ballot initiative during the next election in 2020.

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Iowa Gov. Kim Reynolds (R) toured a medical marijuana manufacturing facility. Iowa is a “red state” with socially conservative voters, but Gov. Reynolds has made conciliatory remarks in recent days about marijuana, which remains illegal in her state.

Because Reynolds is a staunch Republican, her thawing attitude toward marijuana is significant and could prove a bellwether in the American heartland.

The following snapshot of Iowa’s laws regarding cannabis reveals that those pushing for marijuana legalization throughout the country still have plenty of work to do and minds to change:

  • Gift of one-half of an ounce or less. The crime is a misdemeanor, with potential penalties of up to six months in jail, a fine of as much as $1,000, or both.
  • Up to 50 kilograms. A violation is a Class D felony, and is punishable with up to five years in prison and a fine of between $750 and $7,500.
  • Between 50 and 100 kilograms. A violation is a Class C felony, and is punishable with up to 10 years in prison and a fine of between $1,000 and $50,000.
  • Between 100 and 1,000 kilograms. A violation is a Class B Felony, and is punishable with up to 25 years in prison and a fine of between $5,000 and $100,000.
  • More than 1,000 kilograms. A violation is a Class B felony, and is punishable with up to 50 years in prison and a fine of up to $1,000,000.

Michigan regulators have so far licensed three medical marijuana firms to begin selling recreational marijuana in December.

New Jersey leaders have shelved previous efforts to secure state-wide legalization of recreational marijuana. Instead, top members of the state Senate said that they plan to put the question to Garden State voters in the 2020 elections as a referendum next November.

In Pennsylvania, the lieutenant governor embraced legalization, by tweeting: “The truly controversial thing about marijuana in PA is we ruin 1000’s of lives each year by criminalizing it.” Marijuana is a Schedule I drug in Pennsylvania. Possession of 30g or less is a misdemeanor punishable by 30 days in jail and a $500 fine.

Under legislation that Democratic lawmakers introduced on October 30 in the Wisconsin legislature, possession of marijuana would be decriminalized. The bill faces Republican opposition but the state’s Democratic governor has pledged support and chances of eventual passage are good.

Questions or comments about the nationwide legal landscape as it pertains to pot? Drop me a line: mailbag@investingdaily.com

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John Persinos is the editor-in-chief of Marijuana Investing Daily.