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If investors examined the situation, they would likely discover a number of fast-growing trends, such as blockchain, cloud computing and gene therapy in the health sector. But there may be no industry with a growth rate as impressive as marijuana at the moment.
Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" It seems that sales for the industry of cannabis are limited by our imagination, whereas I personally thought that Cowen GroupThe estimate of global sales of $ 75 billion by 2030 was quite aggressive. The recent report from Stifel's analyst, Andrew Carter, had put me out of the water. $ 200 billion in annual sales in a decade. To succeed, such a scenario has a major disadvantage: the United States must legalize marijuana at the federal level. "Data-reactid =" 12 "> It seems that sales of the cannabis industry are only limited by our imagination, whereas I personally thought that Cowen GroupThe estimate of global sales of $ 75 billion in 2030 was pretty aggressive. The recent report from Stifel's analyst, Andrew Carter, put me out of the water. He advocated annual sales of $ 200 billion in a decade. To succeed, such a scenario has a major disadvantage: the United States must legalize marijuana at the federal level.
A person who holds cannabis leaves in his hands.
Source of the image: Getty Images.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Make no mistake: we have come a way incredibly in the United States since 1995, when no state had legalized the medical or recreational pot, and that support for legalization had risen to about 25%. two-thirds of respondents Gallup's annual poll has promoted the legalization of marijuana, with 33 states having already approved medical cannabis. Of those 33 states, one-third (11) also authorize consumption for recreational purposes, with Illinois being the last to legalize marijuana last month. Retail sales in the country of Lincoln will begin January 1, 2020. "data-reactid =" 34 "> Make no mistake: we have come a long way in the United States since 1995, when no State had legalized medical or recreational potability and support for legalization amounted to about 25% .Today, two-thirds of respondents in Gallup's annual survey are in favor of legalizing marijuana , 33 states that have approved cannabis for medical purposes in one way or another, also authorize consumption for recreational purposes, with Illinois being the last to legalize marijuana last month Retail Sales in Lincoln Land will start on January 1, 2020.
<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "According to Carter, the United States represents 100 billion dollars annual opportunity, about half of all sales in ten years. Bank of America& nbsp; Christopher Carey, who called for $ 166 billion in utopian annual salesThe United States generates more than $ 56 billion in legal revenue per year. According to Carter, the United States represents an annual opportunity of $ 100 billion, about half of total sales in ten years. Bank of AmericaChristopher Carey, who has claimed utopian annual sales of $ 166 billion, the United States generating more than $ 56 billion in legal revenue.
However, the majority of these "pie-in-the-sky" sales estimates pose a fundamental problem: they generally assume that the United States will legalize marijuana at the federal level, which is far from a guarantee. In fact, there are seven good reasons to believe that, despite discussions about ongoing cannabis reform at the congressional level, there is virtually no chance of federal marijuana reform before 2021 .
<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "1. Republicans are not generally cannabis fans"data-reactid =" 37 ">1. Republicans are not generally cannabis fans
As many of you may already know, Republicans have always had a more negative image of cannabis than people who identify as Democrats or Independents. In Gallup's poll in October 2018, 75 percent of Democrats and 71 percent of independents were in favor of large-scale legalization, which is comparable to "only" 53 percent of Republicans.
It should be noted that the trend towards legalization has improved considerably within the Republican Party over the last 15 years (20% in 2003 against 53% in 2018), but there is a clear difference in support for the party that currently controls the Senate and the Oval Office. .
Judge a hammer next to a handful of cannabis buds.
Source of the image: Getty Images.
<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "2. McConnell will likely block attempts at reform in the Senate"data-reactid =" 65 ">2. McConnell will likely block attempts at reform in the Senate
<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Another reason for the efforts of marijuana reform Mitch McConnell (R-Ky.), Senate Majority Leader, in the United States will not end until 2021. On more than one occasion, McConnell blocked runners or specific bills related to cannabis reform to go to the Senate for the vote. Even if there was a possibility of adoption in the Senate, which is not guaranteed given the slim majority of GOP deputies in the upper house of Congress, it seems unlikely that McConnell would allow bills that focus on marijuana to be voted. Senate Majority Leader Mitch McConnell (R-Ky.) Has also increased attempts to reform marijuana by 2021. McConnell has repeatedly prevented riders or specific bills related to Although there was a possibility of adoption in the Senate, which is not guaranteed given the slim majority of the GOP in the upper house of Congress, it seems unlikely that McConnell will allow bills to be passed. on marijuana. vote.
<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "3. Congress has more urgent problems"data-reactid =" 67 ">3. Congress has more urgent problems
<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "As much as I like to cover and invest in, l & rsquo; Pot industry, it is important to recognize that there is much more pressing questions about the role for legislators in Congress. Certainly, legalizing marijuana could help create jobs and fuel economic growth through tax collection, but broader economic issues such as the trade war with China or the resolution of health care reform. will take precedence over the idea of a cannabis reform at Capitol Hill. . "data-reactid =" 68 "> Although I like to cover and invest in the pot industry, it is important to recognize that there are much more pressing issues for congressional lawmakers. Yes, legalizing marijuana could help create jobs and fuel economic growth through tax collection, but broader economic themes, such as the trade war with China or health reform, will take precedence over Idea of a cannabis reform on Capitol Hill.
<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "4. Despite the favors of the public, cannabis is not a problem to an elector"data-reactid =" 69 ">4. Despite the favors of the public, cannabis is not a problem to an elector
A fourth problem is that mere favorability is not enough to force legislators to adopt marijuana reform in Washington, DC.
<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Last year, the University Quinnipiac Independent asked adult respondents whether or not they could vote for a political candidate with whom they shared much in common, but who had a different point of view than cannabis: only 13% of respondents stated that they could not vote for this candidate.% noting that they would still vote for a candidate with a different point of view on marijuana. Cannabis is not a single voter problem"data-reactid =" 71 "> Last year, Quinnipiac University, an independent university, asked adult respondents whether or not they could vote for an elected candidate, a political candidate with whom they shared a lot. common points but shared a different point of view of cannabis: barely 13% of respondents said they could not vote for this candidate and 82% said they would still vote for a candidate. is not a matter for a single voter, which means that elected representatives are not afraid to lose their seat by adopting an opposite point of view of the majority.
<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "5. Marijuana remains largely unknown to the FDA"data-reactid =" 72 ">5. Marijuana remains largely unknown to the FDA
<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Legislators are also inspired by the United States. Administration (FDA), which currently considers cannabis and its cannabinoids as have two medical benefits& nbsp; – treatment of two rare forms of early epilepsy. In addition to having approved only one drug derived from cannabis, the FDA does not consider marijuana a medical benefit. According to the Regulatory Agency, considerable studies need to be undertaken to understand its benefits and risk profile, which some legislators have been choosing for years. "Data-reactid =" 73 "> Legislators are also inspired by the US The Food and Drug Administration (FDA), which currently considers cannabis and its cannabinoids as having two medical benefits: the treatment of two forms rare early childhood epilepsy: apart from the approval of a single cannabis-derived drug, the FDA does not consider The regulatory agency believes that extensive studies need to be undertaken to understand its benefits and risk profile, which some legislators have chosen to criticize for years.
A car keychain surrounded by a dried cannabis flower.
Source of the image: Getty Images.
<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "6. There is no defined limit for cannabis"data-reactid =" 95 ">6. There is no defined limit for cannabis
Another dilemma for legislators to consider is that there are no defined depreciation parameters for drivers who have used marijuana. With regard to alcoholism, there is in the sand a fairly well defined line of 0.08% alcohol in the blood. If you exceed this limit, you are legally considered to be impaired. But there are no uniform limits for cannabis use, making some legislators reluctant to even suggest changing federal cannabis laws.
<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "7. It's a question of money"data-reactid =" 97 ">7. It's a question of money
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The seventh and last reason why you should not be expect legalization of marijuana in the United States anytime before 2021 (and 2021 could even push it) is that the reform creates a bit of a money issue. "data-reactid =" 98 "> The seventh and final reason you should not expect the legalization of marijuana in the United States before 2021 (and 2021 could even push it) is that reform creates a financial problem .
US companies that sell marijuana are subject to the restrictions imposed by US tax code 280E. In short, this tax code prohibits pot companies from taking normal deductions on business, with the exception of the cost of goods sold, which often accounts for only a small portion of total sales. This can lead profitable marijuana companies to pay an effective tax rate of more than 70%, which can mean slower expansion and hiring capacity. Nevertheless, although it is illegal at the federal level, the IRS has no qualms about collecting income tax from profitable cannabis companies.
However, if marijuana was legalized at the federal level, these companies would no longer be subject to section 280E. Or, to put that in another context, the federal government would lose its ability to impose a very high effective tax rate on profitable businesses. It is estimated that this would cost the federal government about $ 5 billion over 10 years.
A black silhouette of the United States partially filled with cannabis sacks, rolled seals and a scale.
Source of the image: Getty Images.
<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Waiting continues for newcomers to the US hemp market"data-reactid =" 122 ">Waiting continues for newcomers to the US hemp market
So, what does all this mean for investors in marijuana stocks? As you can imagine, this suggests that Canadian licensed producers who aspire to participate in the much larger cannabis movement in the United States will have to be patient. Of course, this does not mean that these licensed producers will still not find a way to make themselves known in the United States.
<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Since President Trump ratified the agricultural law in December we saw & nbsp;no less than six major Canadian cannabis producers announce their entry into the market for hemp and cannabidiol derived from hemp (CBD). Two of the most recent participants include hexo (NYSEMKT: HEXO) and CannTrust Holdings (NYSE: CTST). Since President Trump enacted the Farm Bill in December, no less than six major Canadian cannabis producers have announced their entry into the hemp and cannabidiol market. Two of the most recent participants include hexo (NYSEMKT: HEXO) and CannTrust Holdings (NYSE: CTST).
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "HEXO recently created an American subsidiary (HEXO USA) and announced its intention, in its latest operating results, to penetrate up to eight US states in 2020 with its CBD products. At the same time, CannTrust is forming a 50/50 joint venture with Elk Grove Farming Company in California. The duo will initially plant 300 acres of hemp in 2020, but the joint venture will have access to nearly 3,000 acres of farmland for hemp harvesting. "Data-reactid =" 125 "> HEXO recently established a US subsidiary (HEXO) in the United States) and announced in its latest operating results its CBD products up to eight US states in 2020. At the same time, CannTrust is creating a a 50/50 joint venture with Elk Grove Farming Company in California, which will initially plant 300 acres of hemp in 2020, but the joint venture will have access to nearly 3,000 acres of farmland for hemp harvesting.
HEXO and CannTrust take this opportunity to build infrastructure and business relationships that could be useful if the US federal government ever legalized marijuana. But for the moment, the sales cap remains relatively low in the United States for at least half a dozen licensed Canadian producers.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 127 "> More from The Motley Fool
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Sean Williams holds shares in Bank of America and CannTrust Holdings. The Motley Fool recommends CannTrust Holdings Inc. and HEXO. The Motley Fool has a disclosure policy."data-reactid =" 132 ">Sean Williams owns shares in Bank of America and CannTrust Holdings. The Motley Fool recommends CannTrust Holdings Inc. and HEXO. Motley Fool has a disclosure policy.
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