Is Legal Marijuana At Risk Under Trump?
“Good people don’t smoke marijuana,” said Jeff Sessions at a Senate hearing in April.
Of course, it depends who you ask.
But, don’t worry. I’m not going to speculate on what I think of him. I just want to address what’s going to happen to marijuana laws here in the US.
Several readers have emailed me in regards to Sessions’ appointment as Attorney General. They’re worried about marijuana stock investments looking forward.
Truthfully, I share the same concerns. But not because I think recent state laws will be overturned.
As most of you know, marijuana is now recreationally legal in many US states. I’ve written about this many times, as I’ve looked at this change in the law as an investing opportunity.
I first wrote about investing in marijuana stocks about a year and half ago. Many of the stocks that I spoke about have soared well over 1,000%. But, many have also crashed back down to their original prices of last year.
There are two companies I wrote about specifically. One was a company that was a pure speculation. The other was a legitimate long term investment. Both are still up considerably, but I don’t know if they will remain there.
Our speculative bet was to invest in penny stocks that had the name “marijuana” or “cannabis” in their company name. The idea was that if we bought early, we’d grab a hold of a company that would inevitably see a bump from mainstream investors buying after us.
This worked very well before the election, but to my surprise, many cannabis stocks crashed after the election. I believe that most investors were taking profits on their gains, though I expected even more gains that did not happen.
The second investment, which was a well-run company with a bright future, has not seen too much movement. This company still has the same management and outlook, so fundamentals have not changed.
I will be holding onto both of these investments. I am not selling.
Here is why…
The speculative investment was a pure bet. I expected to lose the money. But, I made the bet because there could be enormous upside. I have not seen the enormous upside yet (although $MJNA is still up 400% since I first wrote about it), and I am still going to wait.
I made the bet for enormous returns. I have not seen the enormous returns, so I’ll continue to hold. If I lose it all, then I won’t be shocked. But, if I sell before a possible explosion in price, I’ll be very frustrated.
The legitimate investment I made is in $KSHB. I believe in the long term health of this company, so I will hold.
So… back to the appointment of Attorney General Jeff Sessions. The reason why his anti-marijuana stance makes me nervous is not because he will overturn state law. He is known as a constitutionalist, which means he should support state laws.
It is true that cannabis is still federally illegal, and the federal government technically has power over the states. However, several states have been operating in a recreational capacity for several years now. I just don’t see the federal government stepping in now.
Additionally, cannabis is now recreationally legal in California, which is a powerhouse of an economy. Enforcement of federal marijuana laws in the state of California would only exacerbate the current succession movement that is currently taking place.
So, even though Sessions is anti-marijuana, I think he’s smart enough to not pick a fight of that scale.
Now… the part that I am worried about. The biggest concern I have is that investors will perceive cannabis stocks as a risky investment. This perception will negatively price marijuana stocks, which may bring down the cannabis market as a whole.
That would mean that all of those speculation stocks we bet on could end up being worthless. (Again, I am still holding.)
On the flip side, if the entire cannabis sector in general falls in price, that could mean we’d have a buying opportunity. We’ll have to really sort through the mess of OTC listed stocks to find the best ones.
In theory, this is actually a good thing. Because this would force a ‘cleansing’ of listed cannabis stocks. This would also mean that our speculation strategy is done for.
Regardless, I’m holding. If you’ve invested more money than you’re comfortable losing, you should seriously consider an exit. If you are OK with losing your (hopefully small) investment, then you should stay.
The social perception of cannabis has completely changed over the past several years, as was overwhelmingly proven in this year’s election. Just because out politicians haven’t adjusted their opinion does not mean that cannabis doesn’t have a bright future.
I’ll be patient and wait. The tortoise usually wins.