Since the beginning of 2021, there has probably not been an industry that has produced more excitement than cannabis. And it is to see why, as some estimates suggest that yearly weed sales in the United States could experience a three-fold increase between 2019 and 2025, reaching over forty-one billion dollars.
Thirty-seven states gave the green light on medical cannabis during the November election. 19 (plus Guam) out of the 37 also permit the retail sale and consumption of adult-use cannabis. One could correctly suggest that the United States is going green at a highly rapid pace.
Less than seven million of the 335 million people who live in the United States live in areas where cannabis has been legalized to some extent. Those left have three degrees of legalization. There are eleven states with third-degree legalization that have severely limited-access (SLA) programs and have a population of just over 90 million people.
Furthermore, there are twenty more states and two territories (the United States Virgin Islands and Puerto Rico) that are purely second-degree medical purposes regimes and have a total population of close to 118 million residents. Lastly, in the 20 first-degree states and territories, which have all allowed recreational marijuana use while simultaneously allowing medicinal use (second-degree), there is a population of almost 150 million people.
Cannabis is Still Illegal in Over a Dozen States in the US
Even though Gallup's yearly survey recorded an all-time high of 68% of respondents supporting the nationwide legalization of marijuana, there are still over a dozen states who are yet to make weed legal.
In no particular order, these are the states where cannabis is still entirely illegal:
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Georgia
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Indiana
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Kentucky
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Iowa
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Texas
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Idaho
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Wyoming
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Nebraska
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Wisconsin
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South Carolina
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North Carolina
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Tennessee
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Kansas
The annual Gallup cannabis poll reveals widespread support for legalization.
All age groups, all genders, all attained levels of education, and all household earning levels are in support of its legalization. The holdouts are the people who identify as Republicans: Only 48% of Republicans want marijuana legalized nationwide, compared to 83 percent of Democrats and 72 percent of independents. These states are all presently governed by Republicans or have frequently tilted towards that direction in previous elections.
Additionally, just three (Wyoming, Idaho, and Nebraska) of these states make use of the initiative and referendum processes, meaning that the state's inhabitants have the choice of initiating a ballot measure, collecting signatures, and perhaps having the measure submitted to a general election vote. The remaining states depend wholly on their various Republican Party-led legislatures to bring about a change on the marijuana front.
Will President Biden Stir Up the Marijuana Landscape?
Will something be done regarding the holdout states? Since the start of the year, cannabis stocks have been on a tear. President Joe Biden entered office last week, and on January 5, both Democratic Party Senate candidates in Georgia won their respective runoff elections. This means that Democrats now have a tight grip on the legislative arm of the federal government. This makes the chance of federal legalization much more plausible on paper than if Republicans had maintained their small Senate majority.
The thing that is most especially worthy of note about the shift is that Republican Mitch McConnell, the Senate Majority Leader, is severely against marijuana legalization measures and has nearly globally prevented bills or riders with cannabis legislation from getting to the Senate floor for a vote. With the current House Majority Leader, Chuck Schumer, a Democrat, cannabis legislation is more likely to make to make progress in the House and with the President. The Senate is still not running in favor of legalization.
However, this does not guarantee that we are going to witness major differences in marijuana policy at the federal level. Washington's lawmakers are not sure if they will vote along party lines. What is more crucial to note is that President Biden has not given his support for total legalization. During his campaign trail, President Biden advocated for rescheduling and decriminalizing cannabis, which is a long way from legalization.
Regardless of What Occurs, United States Weed Stocks Have a Bright Future Down the Road
Still, if there is a green light at the end of the tunnel, it belongs to marijuana stock investors. At this juncture, marijuana companies are in perfect condition regardless of whether the federal government makes a move or not. So long as the Department of Justice keeps a hands-off approach, which seems to be what will happen under this new administration, weed stocks will be able to freely operate in the thirty-six states where it has been legalized. Repealing the 280E tax code may be more important for publically traded companies than full Federal legalization.
For instance, the investing community will possibly experience history being made this year by Curaleaf Holdings (CURLF -0.93%), the biggest unadulterated cannabis stock in the United States. Curaleaf is on course to become the first marijuana stock to reach $1 billion in annual sales this year after acquiring the famous Select brand and purchasing privately held multistate operator (MSO) Grassroots. The deal with Grassroots expanded Curaleaf's presence to 23 states as well, which is almost two-thirds of the present legalized market.
Innovative Industrial Properties (IIPR 3.24 percent), a cannabis-focused real estate investment trust (REIT), is an ancillary player with a good chance of succeeding if Biden simply reschedules cannabis. Innovative Industrial Properties depends on its sale-leaseback program to grow its enterprise. With the program, IIP purchases processing and cultivation facilities from MSOs that need cash and immediately leases the properties back to the sellers. The MSO gained the cash that was desperately needed, while the IIP secured a long-time renter.
The argument is that even huge states like Texas may remain cannabis-free in 2022 and beyond without jeopardizing marijuana companies' development prospects.
Bottom Line
Even with the massive popularity of cannabis in the United States and worldwide, there are still states with no intention of following the trends. Though the Democrats seemingly have the power now to make legalization a nationwide event, there is no urgency or need to do it, as the nation's cannabis stocks and revenues are otherwise indifferent to the decisions of these states.
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