As legal marijuana continues its boom, many investors are skeptical about getting into the game out of fear the the federal Government could shut it all down at any moment. The truth is, however, that will never happen.
It’s true, cannabis is still a schedule 1 drug. That means it’s on the same level as LSD and cocaine — drugs that have been labeled as having no medical use. In theory, the Feds have the right to come in and shut down marijuana operations in places like Colorado, where recreational marijuana is completely legal.
I don’t blame investors for being skeptical, especially with an anti-drug warrior like Jeff Sessions in control of our Department of Justice.
Sessions has long been an opponent of any type of marijuana use. He’s been quite clear about it…
“We need grown-ups in charge in Washington to say marijuana is not the kind of thing that ought to be legalized, it ought not to be minimized, that it’s in fact a very real danger,” he said.
He’s also gone as far as saying that “good people don’t smoke marijuana.”
Sessions even sent stern letters to Oregon, Alaska, Washington, and Colorado ― the first four states to legalize recreational marijuana ― challenging the states’ oversight of the industry. They responded by citing the Cole Memo, which is supposed to protect them from federal intervention. Currently, the Cole Memo — passed by then Attorney General James Cole in 2013 — is basically the only legal document currently standing in the way of a runaway Justice Department. It essentially states that the Federal Government will not spend its resources cracking down on marijuana businesses that are operating legally under state law.
But in his letter, Sessions made a veiled threat that the memo could not stop him from a crackdown:
“I would note the concluding paragraph: “nothing herein [in the Cole Memorandum] precludes investigation or prosecution, even in the absence of any one of the factors listed above, in particular circumstances where investigation and prosecution otherwise serves an important federal interest.” Thus, the memorandum “does not alter in any way the Department’s authority to enforce federal law, including federal laws relating to marijuana, regardless of state law.”
But the states aren’t having it… and neither is the public.
Colorado’s Governor John Hickenlooper — who himself was an opponent of the ballot measures to legalize recreational marijuana — responded politely, yet forcefully.
“We believe the objectives underlying our regulatory and enforcement system are aligned with the federal government’s desire to control the production and sale of marijuana and to protect public safety and public health. We are committed to working with you to strengthen our system and are prepared to continue engaging in collaborative enforcement efforts.”
He goes on to explain exactly how Colorado has taken on the Fed’s concerns over safety and public health in his letter.
But for all the bluster, there are plenty of reasons not to worry…
According to Hickenlooper, Sessions himself revealed that he wasn’t intending on doing anything of the sort.
When Hickenlooper met privately with Sessions, he came out of the meeting pretty upbeat.
“He has higher priorities,” Hickenlooper told Politico.
“Marijuana’s not the same threat to this country as heroin, methamphetamine, cocaine — and he recognizes he has limited resources. He said, ‘Listen, we’re not going to come in and shut everything down.’ We have not seen any crackdown. He really said he didn’t plan on having a crackdown.”
I don’t see a crackdown coming either. Most of the reasons Sessions has given for pulling back legalization efforts — driving under the influence, kids getting access to marijuana, emergency room visits — simply aren’t happening.
“We worried about that, we worried about infants getting into it, we worried about driving while high. None of that’s happened. We had a little increase among teenagers right in the first year. Since then, it’s come down,” Hickenlooper noted.
Even police officers disagree with the Fed’s top cop — a Pew Research Center survey of nearly 8,000 police officers found that over two-thirds of them say that marijuana use should be legal for either personal or medical use.
Another reason a crackdown won’t happen is that marijuana is far too hot of an industry to dump water on right now.
For one, there is simply too much money at stake.
According to ArcView Research, “Legal cannabis sales in the United States jumped 17%, to $5.4 billion, in 2015 and are expected to grow by 25% this year, to $6.7 billion.”
The market for recreational marijuana could explode to $21 billion by 2020, according to New Frontier Data. That’s a massive increase from the $5.7 billion last year and the projected $7.9 billion this year.
Two, the industry is bringing in much needed tax dollars. In Colorado alone, legal marijuana sales reached $996 million last year, bringing in $163 million in tax dollars. That makes it the second largest revenue source — three times larger than alcohol, and 14% larger than casinos. According to the Marijuana Policy Group, marijuana tax revenues will overtake cigarettes by 2020.
Some state analysts estimate local governments in California could rake in $1 billion in revenue from the production and legal sale of marijuana.
Three, there are too many good American jobs at risk if Sessions were to start closing up shops. The industry created more than 18,000 new full-time jobs in Colorado alone. That isn’t just entrepreneurs starting pot shops, but those who provide lighting equipment, rent warehouse space, and hold retail positions. Other jobs include providing security, legal representation, and accounting services.
Nationwide, the industry provides over 150,000 jobs. If other states follow along we could see 300,000 new jobs in the next few years.
I’ve personally never been more bullish on the marijuana industry, and I’m now confidently placing my bets in companies operating in the United States.
Arizona, Connecticut, Hawaii, Maryland, Mississippi, Missouri, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, and Wyoming all have measures going forward to legalize marijuana this year.
Each time one of those states “light up”, it will mean millions of dollars for brave investors willing to take a stand against any government intervention in a safe, legal industry.
I put together an entire presentation the shows you exactly which states offer the safest and most lucrative ways to invest in what will be the biggest new industry the U.S. has seen since the tech boom.
Don’t let the Feds scare you away from what could be the single greatest investment you’ll ever see.
The states, law enforcement, and the people themselves won’t stand for it.