One of those industries that never quite lived up to the hype, cannabis stocks rose ‘higher’ on Wednesday as the House set about discussing federal legalisation.
What does this mean for cannabis stocks?
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Are cannabis stocks the next big thing?
Hold your horses there pal, as mentioned above, this industry has been talked up for years now, yet failed to deliver impressive shareholder returns. Major players such as Aurora Cannabis [ACB], Sundial [SNDL] and OrganiGram are in the red in recent years.
However, the legalisation of weed in the US at a federal level could be a massive boon for the industry. With recreational marijuana use legal in just 18 states out of 50 — 38 states allow medicinal usage — this would create a massive amount of opportunity for the estimated $28.3bn weed industry in the US.
The House Rules Committee hearing is related to a proposed bill — better known as the MORE Act — which would legalise recreational usage on a federal level and also create provisions for banking and consumer packaged goods sales. Basically, it would allow banks across the US to do business with cannabis businesses, opening up a host of new funding and trade opportunities.
It’s a bit of a no-brainer really from a certain perspective, as there could be serious money for the federal government to make from the MORE Act. California, one of the first states to legalise marijuana use recreationally, generated more than $1bn in marijuana tax revenue just two years after state-wide legalisation. Legal cannabis sales are projected to reach $40.5bn by 2025. Likewise, the aforementioned businesses in this sector will be able to expand and grow nationwide with little regulatory issue.
However, the bill is expected to meet strong opposition in the Senate. The measure is expected to head to the full House for a vote Friday. Should it pass, investors might have a real opportunity on their hands.
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