If you think the US will soon legalize marijuana at the federal level, you are not alone. Canopy growth CEO and ex Constellation marks CFO David Klein expects it to happen in 2022. I have speculated that marijuana could be legalized across the country as soon as next year.
But could presumptive Democratic presidential candidate Joe Biden be holding up the legalization train? Some might think so after reviewing the recommendations of a task force that the former vice president formed in conjunction with Senator Bernie Sanders. However, there is more to the story.
Image source: WhiteHouse.gov.
Slow motion Joe?
The Biden-Sanders “unity working group” created a 110-page document packed with policy recommendations on a wide range of topics. Among the issues the working group considered was the legalization of marijuana. Anyone who expected the team to recommend the full legalization of marijuana in the United States was probably a little disappointed after reading the task force document.
The task force called for the decriminalization of marijuana through executive action. This includes the automatic removal of all prior convictions for use and possession of marijuana. Additionally, marijuana would be removed from the list of crimes for which people can be deported from the U.S.
There were no recommendations to fully legalize marijuana at the federal level. Will Biden be the “slow motion Joe” when it comes to legalization if he adopts the recommendations of his task force? Not really.
On the one hand, the working group expressed its support for the federal legalization of medical marijuana. Furthermore, the working group document stated that “states should be able to make their own decisions about recreational use.” He added: “The Justice Department should not initiate federal conduct prosecutions that are legal at the state level.”
Suppose Joe Biden wins the Democratic nomination for president as expected and defeats President Trump in November. If you adopt the recommendations of the task force, it is almost certain that the US cannabis industry will expand faster than ever. Biden is more likely to be the “quick-start Joe” of marijuana legalization than the “slow-motion Joe”.
Ready to roar
The door may open soon for major Canadian cannabis companies, such as Canopy Growth, to expand into the U.S. market. But I think US-based multi-state operators will be in an even better position for tremendous growth. Two in particular that I hope are ready to roar under a potential Biden presidency are Cresco Laboratories (OTC: CRLB.F) and Green Thumb Industries (OTC: GTBI.F).
Cresco and GTI are already offering impressive revenue growth. Both companies are based in Illinois, where the recreational marijuana market is booming. Each company is also enjoying rapidly growing sales in the Pennsylvania medical cannabis market.
Even without changes to federal marijuana laws, Cresco and GTI appear to be in an excellent position to build momentum. Cresco’s acquisition of Origin House earlier this year gives it a strong presence in California, the nation’s largest marijuana market. GTI owns 96 retail cannabis licenses, but has so far only opened 48 stores, giving it a slew of clues to expand.
I also believe that there are fantastic investment opportunities among pick and shovel companies that support the cannabis industry. Growth generation (NASDAQ: GRWG) It seems one of the most attractive of this group. It was the best-performing marijuana stock in the first half of 2020 thanks to rapid growth in income.
My hunch is that GrowGeneration will keep its winning forms. The company currently operates 27 hydroponics and organic gardening retail stores in 10 states. It recently raised $ 42 million in gross revenue in a stock offering that provides funds to add new stores.
As is the case with Cresco and GTI, GrowGeneration should be able to generate solid growth even under the status quo. But if medical marijuana is legalized in the US, and the feds recognize state marijuana laws under the Biden administration, I think the sky is the limit for this stock.
