US support for marijuana reaches new high – The Fool Motley

This year has been monumental for the cannabis industry. We saw the first drug derived from cannabis being approved by the Food and Drug Administration, we witnessed the use of the Vermont OK adult weed throughout the legislative process and we were impressed by the Canada has become the first industrialized country in the world to legalize recreational marijuana.

It's a very good year – and it has been further improved.

More Americans want the pot to be legal like never before

Less than two weeks ago, national pollster Gallup released its latest annual survey of Americans' perception of marijuana and, unsurprisingly, its support for legalization, which has reached a new high.

According to Gallup's findings, two-thirds of US adults surveyed (66%) want to see marijuana legalized at the national level. This is 2 percentage points higher than the 2017 results, 6 percentage points higher than the 2016 results and almost double the support recorded in the mid-2000s. In other words, support for Legalization of cannabis has come a long way in a very short time in the United States.

Beyond US support for weed growth to record levels, two sub-categories of support are noteworthy.

First, for the second year in a row, a majority of Republicans in the Gallup poll (53%) favored legalization. To be clear, self-identified GOP members had a much lower preference for legalization than those who claimed to be Democrats (75%) or independent (71%), but it was nevertheless encouraging to see Republican support. who currently control the Congress. , tick higher.

Second, and perhaps most surprisingly, a majority of older Americans are in favor of legalization for the very first time. Nearly three out of five 55+ were in favor of legalization in 2018, with the youngest cohort (18-34 years) showing the strongest support at 78%.

It seems that, at least on the basis of data trends in Gallup's annual poll, marijuana has a real chance to reschedule or reschedule schedules in the United States.

As support increases, the viability of these marijuana stocks increases

Although the badumption that marijuana stocks in the United States are thriving simply because polls have improved over the last few years is still a step forward, it still sparks interest in a number of marijuana stocks single position.

For example, House of origin (NASDAQOTH: ORHOF)(formerly CannaRoyalty) seeks to strengthen its position in California as one of the largest state distributors. While more than 1,000 cannabis brands compete for hundreds of licensed clinics, there are only a few distributors allowed to move the pot from point A to point B. This creates a very lucrative opportunity for Origin House, which does not would be magnified if the federal government changed its tone. Still, California is the fifth largest economy in the world, giving Origin House a great opportunity, whether the federal government changes its mind or not.

Another potential badet is Health Sciences in Freedom (NASDAQOTH: LHSIF), which holds one of twelve medical cannabis licenses in Florida. The Liberty Health Capacity Expansion Project is expected to give the company the driver's seat in terms of peak production in the state, which is probably good news given Florida's generally older population, compared to most American states. In addition, management believes that the steady increase in market share should enable Liberty Health Sciences to reach a market share of between 20% and 25% in Florida.

same KushCo Holdings (NASDAQOTH: KSHB) One could see the benefits of continued cannabis support in the United States, even focusing on the global market. KushCo is best known for its packaging and branding solutions aimed at the cannabis industry. In particular, it provides a tamper-resistant, child-resistant packaging that helps producers comply with local and national laws, while helping them stand out in a very crowded area.

The somewhat recent acquisition of Summit Innovations by KushCo should also be a boon, as Summit produces solvents and hydrocarbon gases. The first is used in the production of cannabis oils, the second is an important mechanism for the production of concentrates. If these alternative consumption options flourish in the United States, KushoCo Holdings could work well.

Do not jump too far for the moment

Again, it is important for Americans, and especially investors, to recognize that legalization must overcome two very important obstacles in the United States.

First, although Gallup's investigation shows Republicans' support for legalization, it's far from safe in Congress. As long as Republicans control Capitol Hill, the chances of legalization or even postponement are slim. The upcoming mid-term elections could certainly change things a bit if the Democrats take over one or both of the congressional chambers, but it's still unlikely that it matters little, given that Trump is still hesitating over the idea of ​​legalizing recreational weeds.

The other problem here is the money. As it stands, marijuana companies are subject to section 280E of the United States Tax Code. In simple terms, this means that any business that sells an illicit substance to the federal government is not allowed to apply normal deductions from corporate income tax, beyond the cost of products sold. This leads to very high effective tax rates. If cannabis was suddenly removed from the list of controlled substances, marijuana companies would be free to take deductions and actually cost federal tax revenues on an annual basis. This could very well be the most difficult of obstacles to overcome.

In short, consider the latest Gallup poll as a step in the right direction towards legalization, but do not get carried away.