CRLBF - Where is federal marijuana legalization holding as 4/20 rolls around?

2023-04-20 07:50:25 ET

It's that time of the year again when the budding marijuana legalization conversation lights up on the federal level. It's actually been going on for quite sometime, and witnessed some momentum last year with the introduction of the Cannabis Administration and Opportunity Act in the Senate and the Marijuana Opportunity Reinvestment and Expungement Act in the House. While there are still some headwinds to the measures being pitched on Capitol Hill, President Biden did ask the DOJ and HHS in October to "review expeditiously how marijuana is scheduled under federal law."

Backdrop: When state and federal laws conflict, the latter preempts the former as per Article IV of the Constitution. However, the 10th Amendment - as interpreted by the Supreme Court - outlines that the federal government cannot "commandeer the state," meaning it cannot force states to arrest cannabis sellers or users that comply with their own state laws. In turn, states also cannot block the federal government from enforcing their laws either. As a result, federal agents could be dispatched to make arrests within states if there was a will tom and the resources were available, but in recent decades sentiment has turned with regards to weed's place in society.

Oregon led the effort towards decriminalization in 1973, California kicked off medical marijuana in 1996, and recreational weed even became legal in Colorado and Washington in 2012. As of today, pot is now legal recreationally in nearly half of all U.S. states, though it still remains a Schedule I drug under the Controlled Substances Act of 1970. The illegal classification on the federal level makes it complicated for companies to operate within their own state borders, as many business activities and banks are regulated by federal law, as well as taxes, trademarks and legal processes like bankruptcy.

Outlook: Despite economic uncertainty and rising inflation, cannabis market research firm BDSA expects legal U.S. cannabis sales to grow 14% to $36.5B by the end of 2023. For investors trying to gain exposure to the sector, check out the latest Seeking Alpha analysis and news on multistate operators like Cresco Labs ( OTCQX:CRLBF ), Curaleaf ( OTCPK:CURLF ), Green Thumb Industries ( OTCQX:GTBIF ) and Trulieve Cannabis ( OTCQX:TCNNF ). Cannabis-related ETFs also include the AdvisorShares Pure Cannabis ETF ( NYSEARCA: YOLO ) and funds like the ETFMG Alternative Harvest ( NYSEARCA: MJ ).

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