Cannabis Stocks in Quarantine
Last Monday was 4/20 and the cannabis legalization clock is ticking!
April 20 is an often-referenced date in cannabis culture. There are different ideas as to why, but the date has long been known as “weed day.”
But unlike past 4/20 dates, this one found the country grappling with an invisible enemy — COVID-19.
COVID-19 has challenged cannabis companies. The economic fallout makes it harder to raise funding for this young industry.
There are legal repercussions too.
At the state level, it makes it harder to collect signatures for petition drives to put cannabis legalization on the ballot. Dealing with the crisis is also taking up legislative energy in states, reducing attention and delaying legalization initiatives.
But that cloud has a silver lining!
We stated last month that cannabis was deemed an essential business in many locations with COVID-19-related lockdowns.
That means the virus is mainstreaming pot.
And it’s not just mainstreaming pot… but pot stocks too! Recently, the most popular ticker on commission-free trading site Robinhood was ACB — a Canadian cannabis company.
So 4/20 hasn’t just become a quirky counterculture meme. It’s entered mainstream consciousness. And as cannabis mainstreams, it ups political pressure at the federal level to act.
Cannabis and the Jobs Market
As you probably know, coronavirus has been great for many cannabis businesses as folks stay home and wait this crisis out — often with freshly delivered orders of their favorite form of cannabis. Some public-reporting cannabis companies are actually beating estimates and changing guidance on this trend.
COVID-19’s slowdown of cannabis legislation might prove to be temporary, too. Dealing with the virus has produced disastrous economic effects, and the potential for cannabusiness to help us recover will add urgency to the legalization push.
People have been losing their jobs, and cannabis means new jobs. The U.S. cannabis industry employed almost 250,000 Americans before the crisis hit, almost doubling headcount over the past three years. Legalized, the cannabis growth industry could help lead the country out of massive unemployment.
Moreover, with the economy knocked on its back, tax revenues are falling. You can bet that states will be looking to make up that shortfall somehow, and possibly by legalizing cannabis. Cannabis, both legal and not, is estimated to be a $56 billion industry, with 90% of it going untaxed in black market sales.
The U.S. ended alcohol prohibition during the Great Depression for similar reasons, so we might get to witness history repeating itself.
So look for cannabis-friendly catalysts in the near future. At the federal level, a few loom on the horizon right now.
For example, Speaker Nancy Pelosi wants cannabis companies to have access to U.S. banks, and she wants it in the next coronavirus bill.
Cannabis companies also want access to existing stimulus provisions, like small-business loans. Thirty-four House representatives are on the record asking congressional leaders to allow cannabis companies access to this stimulus “releaf.”
But cannabis could help us treat COVID-19 victims too. One of the ways the virus kills is through runaway inflammation in lung tissue. Cannabis compounds are well-known for their anti-inflammatory effects, and there are data that support that the plant has antiviral effects, too.
One company that was partially acquired by Canopy Growth last year is giving $2 million in sports drinks for free to U.S. hospitals.
And in Israel, Ichilov Medical Center will start administering medical cannabis to moderate coronavirus patients, hoping its antiviral properties help.
We’re living through an extraordinary time — and it’s creating extraordinary opportunities for the U.S. cannabis industry. COVID-19 might be the catalyst that changes everything for marijuana legalization in the country.
Cannabis executives are bullish, saying that COVID-19 will greatly raise the odds of federal legalization, especially after several states have allowed their businesses to stay open as “essential businesses.”
Increasingly, it’s looking like this might be the last 4/20 when pot is a federally banned substance.
As always, send me your thoughts at AskRay@SevenFigurePublishing.com.
To a bright future,