Cannabis Musings - September 9, 2024

I'm proven wrong once again.

Friends, we talked recently about the generally irrational behavior of cannabis stock prices.  Different from meme stonks, which have their own special brand of economically-irrational behavior (namely because they’re driven by hordes of retail investors pumping ideas on the internet), cannabis stocks are mostly untethered to the usual things that drive prices, like performance.

So, imagine my lack of surprise on Monday morning when cannabis stocks shot up ostensibly on a Sunday post to Truth Social Former President Donald Trump showing support for various areas of cannabis policy:

As I have previously stated, I believe it is time to end needless arrests and incarcerations of adults for small amounts of marijuana for personal use. We must also implement smart regulations, while providing access for adults, to safe, tested product. As a Floridian, I will be voting YES on Amendment 3 this November. As President, we will continue to focus on research to unlock the medical uses of marijuana to a Schedule 3 drug, and work with Congress to pass common sense laws, including safe banking for state authorized companies, and supporting states rights to pass marijuana laws, like in Florida, that work so well for their citizens.

Make of it what you will, but investors were all verklempt over this fairly direct statement by a presidential candidate about Florida adult use, and particularly the shout-out to our old friend, SAFE® Banking.  Now, a cynic might ask: “How large a check to Trump’s reelection campaign was written for that tweet, post, Xeet, Truth?”  The practical (and equally cynical) response to that would be: “Well, it’s about time that the industry figured out how to get federal cannabis policy changed.”

Anyway, back in December 2023, I wrote that:

In my mind, it’s just not worth it for a Presidential candidate to very publicly take on cannabis as a campaign issue if there’s zero practical chance of it passing Congress, on the off chance that a handful of voters might be swayed by cannabis policy, of all things.  It’s way too hot button an issue, and, relative to the zillion other problems in the country and the world, it’s way too inconsequential.  I hope I’m wrong about this – it would be great to see cannabis policy be front-and-center in the Presidential debate.  I just really doubt it’ll happen any time soon.

This thesis was proven wrong earlier this Spring, and (un?)remarkably, continues to be disproven.  Cannabis has turned out so far to be a secondary, yet distinct and real, issue in this presidential campaign.  That, dear readers, is astonishing.  In the good kind of way.  Who would have thought that we’d see the campaigns duel over who’s more in favor of easing federal cannabis policy?  What would Nancy Reagan think?

Close observers of federal policy know that it’s a been a slow, hard slog of progress, one that’s required an incredible amount of patience.  Rohrbacher-Farr (which impedes the use of federal funds in enforcement against state medical cannabis) has been around since 2014, with the Cole Memo (which set DOJ enforcement policy) coming into play one year earlier.  SAFE Banking first started teasing the industry in 2019, and Senate Majority Leader Chuck Schumer introduced comprehensive legalization legislation in 2020 – neither of those honestly had much chance at passing, but the fact that Congress was even talking about improving the state of the cannabis industry was progress.

I don’t dare prognosticate as to where all of this leads – my divination bones are in the shop.  However, I don’t criticize cannabis stockholders for some slightly irrational exuberance towards this good news. It could lead to legalization, it could lead to nothing.  Heck, maybe it could lead to SAFE® Banking! 

Now, these Cannabis Musings remain staunchly nonpartisan, but it’s worth noting that, on Monday afternoon, the Harris campaign questioned the honesty of Trump’s statement, claiming that “Donald Trump does not actually believe in marijuana reform.”  This is all playing out in real time, and we’ll have to see whether the issue stays on the radar, whether Vice President Kamala Harris offers up a firm cannabis policy (separate from the Biden administration’s efforts), and whether Trump holds firm to his purported position.

What I do know is that the conversation is changing for the better, the right people are taking the issue seriously, money is being spent, and cannabis policy is finally being thrust into the mainstream. 

© 2024 Marc Hauser.  None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form.  The foregoing represents my own views and not those of Jardín.