I call it the “holy grail” of the cannabis industry – a game-changing event that would mint the first cannabis billionaire and richly reward early investors.
I’m talking about the federal legalization of cannabis.
Some say it’s still a pipe dream, years away at best. However, the reality is that federal legalization could be right around the corner.
If you don’t believe me, check out what the CEO of the largest cannabis company had to say in an interview with Jim Cramer on Mad Money.
Here’s the clip from CNBC.
David Klein, the head of Canopy Growth, told CNBC’s Jim Cramer on Tuesday that as states continue to gradually permit medical and recreational use of marijuana, Congress will have no choice but to act.
“My assumption is that 2022, for me, is the magic number,” he said in a “Mad Money” interview. “I think, as you watch more and more states move to legalization for medical or rec, you really bring in almost two more senators each time who are really going to feel compelled to not make criminals out of the people in their state who are doing what’s legal in their particular state.”
Why Klein’s Comments Are an Important Signal
#1 – CEOs have an incentive to establish realistic goals that are attainable. It doesn’t do a CEO any good to set expectations really high and then fall short. For Klein to publicly project legalization in 2022, it tells me he knows about things that are happening behind the curtain. I think he’s showing his hand.
#2 – U.S. federal legalization by 2022 is the most optimistic projection that I’ve heard from anyone on Klein’s level.
#3 – As the CEO of Canopy, Klein has access to the best contacts and information in the industry. His opinion about the cannabis industry carries a lot of weight.
Current Events Are Pointing Towards Legalization
COVID-19 just made the case for legalizing cannabis stronger than ever. The U.S. economy shed around 40 million jobs in eight weeks. According to recent reports, many of those jobs are never coming back. Tax revenue has plummeted. Officials are calling it catastrophic. Politicians are desperate for new sources of taxes.
Federal legalization is the perfect remedy because it has the potential to create millions of new jobs and generate billions in taxes.
The U.S. cannabis industry would be flooded with capital. Cannabis companies would finally be able to list their stocks on U.S. exchanges, accessing billions in new capital to grow. Institutional fund managers would be able to invest. The largest companies in the U.S. would be able to invest without the fear of prosecution.
California and Oregon would be allowed to distribute out of states and would quickly capture huge chunks of national market share all across the country.
In the meantime, while cannabis remains illegal at the federal level, cannabis was classified as an essential industry by most states during the quarantine, giving further credibility to legalization.
Besides, at this point, federal legalization looks like a natural and inevitable step forward.
31 states have already legalized medical cannabis and 11 have legalized recreational cannabis. In November, at least four more states are voting on cannabis. Another six states are working to get cannabis initiatives on the ballot. The U.S. could have 10 more states going legal in 2020, bringing the total number of states up to 41 out of 50.
The U.S. Cannabis Industry is Ready to Thrive
The CEO of Canopy Growth Corp (CGC) believes the U.S. will legalize cannabis at the federal level by 2022. Worst case scenario this a little over two years away.
The incentives to legalize have never been stronger. COVID-19 has wreaked havoc on the U.S. economy. Legalizing cannabis is a quick and relatively easy way to create new jobs and generate new taxes.
If the U.S. does legalize, and I expect it to happen, now is the time to learn how to capitalize. Cannabis stocks are emerging from a 2-year bear market and the sector looks the most undervalued it has in years.
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About the Author & Cannabis Stock Trades
Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.
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