Trump Will "Probably" Support Bipartisan Marijuana Bill

If you like your dispensary, you can keep your dispensary... or at least that's what a new bipartisan bill introduced by Sens. Elizabeth Warren (D-MA) and Cory Gardner (R-CO) would ensure. 

 

The legislation, known as Strengthening the Tenth Amendment Through Entrusting States (STATES) Act would allow states to regulate marijuana without federal interference by amending the Controlled Substances Act so that it does not supersede any state, territory or tribal laws "relating to the manufacture, production, possession, distribution, dispensation, administration, or delivery of [marijuana]"

 

"It's time to reform American's outdated marijuna policies," Warren tweeted on Thursday.

Gardner says that trying to roll back pot laws would be like "putting ketchup back in the bottle" (baked?) - and noted that current finance laws have made it difficult for legal marijuana businesses to operate. 

“This city of Denver, the state of Colorado, can collect taxes … they can take it to the bank,” Gardner said. “But if you’re in the business, if you work for the business, you can’t get a bank loan or set up a bank account because of the concern over the conflict between the state and federal law. We need to fix this public hypocrisy.”

Gardner and Warren announced in April that they were working together to hold Trump accountable for campaign rhetoric about respecting states rights, while Warren has reportedly said that the goal of the bill is to "ensure that each state has the right to determine for itself the best approach to marijuana within its borders." 

Trump "probably" supports

President Trump says he "will probably end up supporting" the bill according to Politico, putting him at odds with Attorney General Jeff Sessions' hard-line stance on the devil's grass. Sessions rescinded an Obama-era policy which significantly limited prosecution of individuals and businesses who sold pot legally under state laws. 

Pressed on whether he supports the measure while addressing reporters outside the White House on Friday, the president said he supports it now and will “probably” support it going forward.

“I really do. I support Senator Gardner,” Trump said of the lawmaker’s bill. “I know exactly what he’s doing, we’re looking at it. But I probably will end up supporting that, yes.” -Politico

The bill comes as Canada's Senate voted 56 to 30 to legalize recreational marijuana, leaving only a few amendments to be decided on by the House of Commons before the law can be passed. 

While there is not yet a defined date when the drug will go on sale, clearing the Senate appeared to be the last serious hurdle for the bill, with a number of Conservative senators opposing legalisation.

Health minister Ginette Petitpas Taylor said earlier this year that cannabis would only go on sale a few months after legalisation, because new retail systems needed time to launch successfully. -Independent.co.uk

What does this mean for Canadian pot stocks? As Chris Woods at Grizzle.com noted in April: 

The rug has officially been pulled out from underneath one of the largest bubbles in global equities: Canadian marijuana stocks.

1. Legalization of marijuana always equals price deflation – In every legal market, retail and wholesale prices peak near the date of legalization due to lack of supply and then quickly begin to fall, driven down by new entrants.

2.  The black market is the biggest competitor for licensed producers – The marijuana market is mature in Canada with the black-market supply already exceeding demand (Canada exported 20% of marijuana production in 2017). Legal supply will have to compete on a price basis for market share — the black market won’t magically disappear.

3.  Extreme valuations are reminiscent of the 2010 rare earth bubble. The bulls want to believe marijuana is a manufactured and branded product. It’s not. Marijuana is a commodity and always will be (see Colorado, Washington, and California).

MARKET WILL BE FLOODED WITH PLANNED LEGAL CAPACITY – 2X DEMAND

Grizzle compiled the planned capacity of the top 13 legal producers in Canada. Based on estimated consumption rates, Canada will be at least 850,000 kg (85%) over supplied by the end of 2021. Importantly this oversupply doesn’t account for smaller producers or the black market, which is already fully supplying the market.

With no valuation support, marginal management teams, and a skittish retail investor base — the outlook for marijuana equities is bleak.