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The Surprising Truth About Cannabis Legalization

Written by Alex Koyfman
Posted July 25, 2019

Dear Reader,

It could come by the end of the year.

An end to more than eight decades of federal marijuana prohibition in the United States drew closer than ever this week, after a series of high-profile congressional meetings in D.C.

On Tuesday, Chairman of the House Judiciary Committee Rep. Jerrold Nadler (D-NY) and 2020 Democratic contender Sen. Kamala Harris (D-CA) filed a marijuana legalization bill that would not just make cannabis legal for the first time since the passage of the 1937 Marijuana Tax Act, but would also exonerate those incarcerated for marijuana-related crimes.

It's a sweeping set of legislative intentions, and it comes with no small dosage of Democratic branding.

The main drive behind the Marijuana Opportunity Reinvestment and Expungement (MORE) Act is to right the wrongs of generations' worth of needlessly severe and often racially biased arrest and conviction patterns.

The Aim: Social Justice

According to statistics published by the ACLU, 52% of drug-related arrests stem from nonviolent offenses involving marijuana.

Of the 8.2 million marijuana arrests between 2001 and 2010, 88% were for simple possession of small, personal-use quantities.

But delving into the specifics of these numbers is where the truly nefarious tendencies start to become evident.

Despite roughly equal usage rates, blacks are 3.73 times more likely than whites to be arrested for possession.

The MORE Act's primary aim is to begin to balance these numbers and, in the process, relieve some of the enormous financial burden on public resources created by these massive incarceration rates.

Another provision of the MORE Act would be a 5% federal tax on the sales of marijuana products.

Again, the intent here is remedial in nature.

Some of the revenue generated would be funneled into a trust fund designed to finance job training and legal assistance for some of the individuals victimized by prejudiced criminal justice practices.

Rivals Uniting

Kamala Harris's bill was originally co-sponsored by Senator Elizabeth Warren and Senator Cory Booker — both of whom are now high-profile rivals for the 2020 Democratic presidential nomination — but has since been joined by more than 20 other members of Congress, including one Republican Rep., Matt Gaetz, from Florida.

While some may view this Democratic proposal as pandering and "virtue signaling" for the sake of sweeping up as many votes as possible in the upcoming election cycle, it's only a single example of what has now been firmly established as a trend for federal lawmakers. 

The MORE Act was filed this past Tuesday, the very same day a Senate committee was scheduled to hold a potentially paradigm-shifting hearing on banking access for marijuana businesses.

The latter's eventual effects could neutralize one of the cannabis industry's most substantial obstacles to entry: the need for all-cash operations.

Given access to banks and, most importantly, non-cash transactions, an entire laundry list of risks for potential investors falls away, fueling even more growth.

A Long Way to Go

Though a thorough overhaul of federal law before the close of 2019 might be optimistic, something major in 2020 now looks extremely likely.

But the battle is far from over.

Despite the fact that cannabis today is starting to feel like less of an illegal substance (much less a "drug") and more of a dietary supplement, the truth is that these lingering federal issues remain a major roadblock for the marijuana industry.

As of June, 11 states still have no decriminalization laws on the books, viewing cannabis as a Schedule 1 drug, in full agreement with the feds.

And the scariest thing of all?

If you're a contractor or business owner who works for or transacts business with a company engaging in state-legal cannabis sales, the federal government can now go after you for money laundering simply for accepting payment.

So the problems remain, and they are substantial.

Now imagine what will happen when all of those problems go away — which they will, perhaps as early as the end of this year, if not at some point in 2020.

The changes will be transformative.

Which makes the next few months the most important in the history of cannabis investing — specifically for the investors themselves. 

The Biggest Investment Opportunity Since the Dot-Com Boom

Investing today, especially after the recent sector-wide correction, might be the smartest move you make in your entire investment career.

In the past, I've compared this moment to the months before the passage of the 21st amendment in 1933, repealing the prohibition of alcohol.

Imagine buying shares of Budweiser or Jack Daniels back then.

Well, that's where we are today, only the legal cannabis industry, by some estimates, will pull in as much as four times what the alcohol industry does on an annual basis in the U.S.

No matter how you look at it, you need to position yourself now.

Not next month. Not next year. Now... because with developments coming this fast and the election year looming, changes will be hard to respond to once they begin in earnest.

I know the process of choosing the right investment in any sector is daunting enough.

With cannabis, the problem is compounded, as the market is still fraught with overbought, underperforming companies.

But I believe I've found the cure for all that.

It's perhaps the most undervalued investment in the cannabis market today.

Right now it's hardly a blip on the radar in terms of market capitalization, but once the legislation catches up to the market's momentum, it could become the next billion-dollar cannabis empire.

Learn all about it now before the other shoe drops on federal prohibition.

Fortune favors the bold,

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Alex Koyfman

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Coming to us from an already impressive career as an independent trader and private investor, Alex's specialty is in the often misunderstood but highly profitable development-stage microcap sector. Focusing on young, aggressive, innovative biotech and technology firms from the U.S. and Canada, Alex has built a track record most Wall Street hedge funders would envy. Alex contributes his thoughts and insights regularly to Wealth Daily. To learn more about Alex, click here.

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