Market Watch By Trey Williams As the marijuana industry celebrates the victory of legalization in four additional states, experts and advocates are expecting the next stage in the battle to take place at the federal level.
California, Massachusetts and Nevada voted on Tuesday to legalize the recreational use and sale of marijuana, a huge step in the continued push to solidify the burgeoning cannabis industry. Maine, which voted whether to legalize recreational marijuana, is still too close to call. With 97% of votes counted, the New York Times has the “yes” camp ahead by one percentage point. Arkansas, Florida and North Dakota passed measures legalizing medical marijuana.
Adam Bierman, chief executive of cannabis management services company MedMen, said it would likely take another four to eight years for full, federal legalization.
“Starting next year the plan is a full-court press on federal law changes,” Bierman told MarketWatch. “We’re already paying for it. You’re four to eight years out; it’s that kind of play.”
California, which was hardly in doubt, is a big win for the industry. Advocacy groups and organizations put a lot of money, emphasis and time on California because the Golden State typically sets political trends for the rest of the country.
That has laid the groundwork for lobbying for federal legalization. And Bierman does not expect the process to be blocked by a Donald Trump presidency.
“Now how many interests do you have in California telling the people who represent California at the federal level, who need campaign dollars, who need to be re-elected, ‘Hey, it’s important when you go there marijuana is a focus,’” Bierman said. “We care less about the president, we care less about the executive branch of politics because ending prohibition doesn’t have to do with the president.
“It doesn’t start from the top down. It has to do with Congress, it starts at the state level, and that lobbying is happening already, it will get ramped up next year.”
But there is still a lot of uncertainty around how a Donald Trump-run government views marijuana regulation and legalization and what impact it would have on the federal process. A lot rides on who he names as his Attorney General, Privateer Holdings Chief Executive Brendan Kennedy told MarketWatch. Privateer is a private-equity firm that specializes in the cannabis industry.
“Neither candidate was ever asked to make a definitive statement on marijuana legalization despite it being on the ballot in nine states,” he said.
Trump has made comments in the past in favor of medical marijuana.
Marijuana stocks, which are still all traded over-the-counter, were mostly lower following Tuesday’s election. What that says about industry sentiment is unclear. They are, in part, being impacted by the uncertainty surrounding a new government, although the selling also indicates the industry is maturing, said Kennedy.
“We have a general skepticism toward any OTC stock. In the past they did well because they gave investors who wanted some exposure to the industry that chance,” Kennedy said. “But you’ll start to see larger pools of traditional capital in the industry so there will be greater competition from better companies.”
While the majority of marijuana stocks suffered significant losses on Wednesday, Pineapple Express Inc. PNPL, +6.38% closed up more than 34%, outperforming the entire sector. Two Rivers Water & Farming Co. TURV, +14.43% Canopy Growth Corp.CGC, +3.62% Insys Therapeutics Inc. INSY, +5.46% GW Pharmaceuticals PLCGWPH, +0.37% and a few others also enjoyed gains.
The S&P 500 SPX, -0.23% rose more than 1% and the Dow Jones Industrial AverageDJIA, +0.62% gained less than 1%. The Nasdaq Composite COMP, -1.31% also rose just over 1%.