What's In Store For Pot Stocks This Year?
Zacks Investment Research | Jan 23, 2020 08:46PM ET
The much-awaited Cannabis Banking Bill was passed by the House Financial Services Committee on Mar 28, 2019. This opened up avenues for legal and effective financing for marijuana companies in the United States.
This year began with Illinois starting to sell recreational marijuana from Jan 2. After discussing the pros and cons of the recreational usage of cannabis, the Illinois House and Senate voted in favor of legalizing marijuana on May 31, 2019. With this, Illinois became the 10th state in the United States to legalize the adult use of CBD products.
Observers of the cannabis industry expect the momentum from 2019 to continue in 2020. However, after a banner year, many experts believe that marijuana may be headed for a dead-end in 2020. They believe that the Capitol Hill might want to avoid legalizing marijuana at the federal level at least till the end of this year owing to the presidential elections in November and President Trump’s impeachment trial.
However, it should be noted that the cannabis industry associations and businesses have kept the revolution for federal level legalization alive through their concerted lobbying.
According to OpenSecrets.org, The Cannabis Trade Federation spent $790,500 on marijuana lobbying in the period between January and September last year. This was up from $170,000 in 2018. Let’s find out what can be expected from the pot industry in 2020.
Federal Level Marijuana Legalization Possible in 2020
While Trump has maintained his stand on the opposition of federal legalization of marijuana, he has allowed the states to individually decide on legalizing marijuana.
A poll from the Pew Research Center reported that approximately 55% of the Republicans supported marijuana legalization. The poll also found out that opposition to decriminalizing marijuana also dropped to 32%. This is significant for the space because Republicans have historically been skeptical about drug policy reformations.
Furthermore, most of the Democratic presidential candidates, except Joe Biden, also support marijuana legalization. In fact, Bernie Sanders had earlier promised that the next president would take executive action to make marijuana federally legal. Analysts now expect that a bipartisan majority might finally approve the decriminalization of weed federally.
Current players in the marijuana industry like Cronos Group (NASDAQ:CRON) , Aurora Cannabis Inc. (TSX:ACB) , Innovative Industrial Properties, Inc. (NYSE:IIPR) and Canopy Growth (NYSE:CGC) have posted decent returns of 17%, 4.5%, 4.6% and 23.1%, respectively in the past 30 days. Aurora, Innovative Industrial, Cronos and Canopy currently carry a Zacks Rank #3 (Hold). You can see Zacks Investment Research
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