These powerful forces are driving the cannabis market forward, no matter the outcome of this election…
It was only 10:00 A.M., but the sun had already burned away the marine layer. The only thing in the California sky was an expansive blue backdrop for a big, bright sun.
I’d been talking to Kyle Kazan and his business partner, Graham Farrar, for about an hour as we walked through the cannabis grow operations for Glass House Group, one of California’s largest growers.
The warm smell of cannabis flower mixed with a steady Pacific Ocean breeze permeated the air as we stepped into the third greenhouse of the morning.
Then Kyle asked, “What do you think will happen in the election?”
Now, normally I would have dodged the question. This election has everyone on edge, and why spoil an otherwise pleasant and productive conversation?
But I knew he was talking cannabis.
“As far as the cannabis market is concerned, it doesn’t matter who our next president is,” I said.
The surprise that filled his face provided his response. It said to me, “the fate of the entire world hangs on this election. Surely cannabis can’t have ‘presidential immunity.'”
But it does.
And that’s because the factors driving the cannabis market forward are so powerful that no federal election outcome can stop them…
1. Adult-Use in 20-Plus States
The first unstoppable factor driving cannabis forward is that states are legalizing recreational use anyway. States aren’t waiting for Congress to act, and more and more are instead flexing their Tenth Amendment muscles.
Cannabis creates jobs and generates revenues that can be taxed by state and local governments. Both are sorely needed by states. And cannabis legalization, especially for recreational use, provides a powerful boost to both.
Cannabis is already legal for adult-use in thirteen states plus Washington D.C. And on Election Day, voters in Arizona, New Jersey, South Dakota, and Montana will have the opportunity to pass adult-use cannabis in their states. (Plus, Mississippi will be voting on medical use.)
Notice that four out of those five states are “Red” states.
That’s because cannabis has bipartisan support across the country. And while ballot measures have been the primary tool for getting cannabis legalized so far, I think you’ll see more state legislatures pick up the legal marijuana banner and pass bills legalizing cannabis in 2021.
To the four states with recreational legalization on the ballot next week, you can probably add New York, Pennsylvania, and maybe even Ohio. That, plus a couple of happy surprises – Florida, anyone? – and I bet you’ll see eight states moving to full adult-use by the end of 2021.
Between the carrot of existing bipartisan support for cannabis and the stick of a bigger tax base, I predict that, by the end of 2021, over 20 states will have legalized cannabis for adult-use.
That will give 50% of the U.S. population access to marijuana for recreational use within their state.
And while state-by-state legalization is a fast-moving train that’s too big to stop, the next thing I see for 2021 converts that train into a rocket ship.
2. 10 U.S. Cannabis Companies on the Big Board
The New York Stock Exchange (NYSE) and the Nasdaq have been reluctant to allow U.S.-based plant-touching cannabis companies to list their stocks for trading.
It’s not that they are prohibited by law. It’s just that, up to this point, they viewed listing these stocks as too great a risk.
But attitudes change – especially when trading volumes surge and market caps soar.
For proof, look back no further than September 2, when the AdvisorShares Pure US Cannabis ETF (NYSE: MSOS) began trading on the NYSE.
This ETF (exchange-traded fund) owns U.S.-based plant-touching cannabis companies. And by allowing it to trade, the NYSE has taken its first big step towards letting companies like Trulieve Cannabis Corp. (OTC: TCNNF), Curaleaf Holdings Inc. (OTC: CURLF), and Cresco Labs Inc. (OTC: CRLBF) list on its exchange.
As this happens, you can bet the Nasdaq will not sit idly by and let its main competitor pick up all that trading volume from the booming cannabis market.
That’s why, over the course of 2021, I predict that 10 U.S. plant-touching cannabis companies will begin trading on either the NYSE or Nasdaq.
Some will be companies that are already public, like Trulieve or Curaleaf. Others will use these exchanges to go public, like Florida-based Surterra Wellness or Colorado-based Wana Brands.
The ability to list on a major U.S. exchange allows hundreds of billions of dollars in capital to move into cannabis stocks. Mutual funds, pension plans, and a host of other “Big Money” players will finally be able to invest.
And with cannabis stocks trading on the NYSE and Nasdaq, leading companies like Standard & Poor’s (S&P Global) and the Russell US Indexes be forced to add cannabis stocks to their indexes, automatically pulling in even more money through index funds and major ETFs.
Together, the inevitable advance of adult-use cannabis state by state and the flood of capital unleashed by listing on the NYSE or Nasdaq is enough to drive cannabis stocks ten-times higher over the next year.
And even though the presidential election results will neither help nor hurt this outcome, there is one election result that will add a third-stage booster to this cannabis rocket ride to the moon.
3. Control of The Upper House
Both President Donald Trump and his rival presidential candidate Joe Biden have sent mixed messages regarding their attitude toward cannabis legalization. Neither are firm advocates nor hardened in their opposition. And I believe either of them would sign any one of the six bills currently sitting in Congress, waiting for a vote.
All of these six bills include provisions to either de-schedule marijuana or provide a safe harbor from federal prosecution for businesses operating legally within state cannabis laws.
So, there are plenty of options for passing legislation that will help clarify the federal government’s stance regarding cannabis.
But it’s up to the Senate to advance those bills onto the legislative agenda – and that’s where the election can have a near-term impact on the cannabis market.
Many cannabis bills have passed the House of Representatives over the last couple of years, but none have made it past Senate Majority Leader Mitch McConnell (R-KY).
Should the Democrats gain control, then the Senate Majority Leader position will go to a Democrat, and the new Majority Leader will determine what bills get put up for a vote in the Senate.
And since cannabis legalization has broad approval across both parties in the Senate, once these bills get put up for a vote, there is a high likelihood they will pass.
The direct effect of these bills will be to remove expensive banking barriers that cannabis companies currently face. Or to clear up the extra tax burden that cannabis companies face through IRS Rule 280E.
But most importantly, any form of cannabis legalization by the federal government significantly lowers the perception of risk associated with cannabis companies. Lower risk makes every dollar earned in the future worth a lot more today.
And that’s a powerful boost to stock prices.
Powerful enough to turn a 5X rally into a 10X. Or a 10X rally into a 20X.
Even if Republicans retain control of the Senate, we’ll still have an incredible year for cannabis. My first two predictions – advancing state-by-state recreational use and up-listing of cannabis stocks to major exchanges – still hold.
And not only are they powerful enough to grant cannabis stocks “presidential immunity,” they are powerful enough to set you up for a lifetime of wealth over the course of the next year.
But you don’t have to wait for any of these forces to play out to start making money. In fact, waiting would be the biggest mistake you could make.
Today is the day to make your move.
Go here now to learn how you can start generating wealth today and set yourself up for even bigger profits in 2021 with a NICI Membership subscription.
Executive Director, National Institute for Cannabis Investors
7 responses to “3 Predictions for 2021 That Will Boost Your Cannabis Profits”
October 29 2020