WASHINGTON, January 4, 2017: The recreational marijuana biz is totally screwed. Like, total bummer, man. According to ZeroHedge,
“Just days after California started selling recreational marijuana to anyone over the age of 21, Attorney General Jeff Sessions has announced plans to rescind policies that have allowed states to circumvent federal laws and legalize the drug.”
ZeroHedge ghost author Tyler Durden cites an AP article on the issue. After echoing Durden’s comments, AP provides the specific goods on this breaking story, noting that
“Sessions rescinded the policy by president Barack Obama’s Justice Department that has generally barred federal law enforcement officials from interfering with marijuana sales in states where the drug is legal.
“‘In deciding which marijuana activities to prosecute under these laws with the Department’s finite resources, prosecutors should follow the well-established principles that govern all federal prosecutions,’ by considering the seriousness of the crime and its impact on the community, Sessions wrote in a one-page memo to the nation’s federal prosecutors.
“The move by Trump’s attorney general likely is sure to add to confusion about whether it’s OK to grow, buy or use marijuana in states where the drug is legal.
“It comes just after shops opened in California, launching what is expected to become the world’s largest market for legal recreational marijuana and as polls show a solid majority of Americans believe the drug should be legal.”
One consequence of Thursday’s news: The small but growing crop of marijuana-based stocks – companies created to grow, sell and otherwise promote the purchase and use of recreational marijuana in several states where it’s been legalized – took a shellacking after Sessions’ announcement. This news is throwing a monkey wrench into get-rich-quick investors who’ve been piling into these iffy stocks in droves.
Currently, one somewhat saner method of investing in marijuana stocks is – or has been – the relatively new, NYSE/ARCA listed “ETFMG Alternative Harvest” ETF (symbol: MJX). But this increasingly popular (and somewhat deceptively named) ETF also took a hit on the news, as ZeroHedge noted via the chart below.
Moving from Wall Street back to the cannabis fields themselves, in addition to California, five other states – and notably, the District of Columbia – have already created diverse “legal,” regulated, and generously taxed markets for recreational marijuana, including Nevada, Colorado, Oregon, Washington and Alaska. Maine and Massachusetts are on deck to do the same next summer.
All jurisdictions involved are likely not so much pro-recreational marijuana as they are pro-tax windfalls. For example, according to AP
“Colorado, the first state to legalize recreational marijuana sales, has raised more than $500 million in tax revenue since January 2014. This comes from a 2.9% state tax on all marijuana sales along with an additional 15% excise tax and 10% special tax for adult-use weed sales.”
Other states are also eager to rake in the potential windfall that legalized pot is sure to create as well, just as many states jumped on the legalized gambling bandwagon several years back.
On the other hand, Sessions’ policy change, if strictly enforced, is likely to prompt a quick and raucous backlash not only from perpetually tax-hungry state officials, but also for the significant cadre of pot smokers who regard recreational marijuana as a “constitutional right.”
In addition to triggering pot smokers and pot stocks alike out of their safe spaces with this legal macro-aggression, Sessions’ policy change could also affect other industries hoping to piggyback on legalized recreational marijuana policies as well.
For example, it looks like fast food purveyor Jack in the Box, Inc. (JACK) could also take a hit as a result of Sessions’ announcement. JACK shares are off a quarter of a percent Thursday as investors re-think the company’s creative product response to the newly effective California marijuana law, as Deadline notes”
“At least one business has embraced the anticipated new wave of recreational use. Jack in the Box Inc. has partnered with a digital media company backed by Snoop Dogg on a new munchie meal for hungry smokers, becoming the first national fast food chain to formally embrace the marijuana user community.
“The ‘Merry Munchie Meal’ will be available at three California locations for a week in January. Its price is an elbow-in-the-ribs $4.20, also the time of the day notorious for smokers to light up. The meal features two tacos, french fries, onion rings, five mini churros, three chicken strips and a small drink.”
Think we’re kidding. Check out a Jack in the Box Munchie Meal advert below:
Will McDonald’s Corp. (MCD) add its own version of a Munchie Meal (McMunch?) as an adult companion to its Happy Meal®? Would Mickey D’s
users customers get a mini-bong in each box? Don’t miss the next thrilling episode in the neverending U.S. Marijuana Wars.
Meanwhile, for investors, the burning question still remains: Should we buy shares of recreational marijuana stocks or the MJX ETF on today’s dip? Or should we play it safe and gamble on the latest cryptocurrencies instead?
As for yours truly? This Market Maven plans to sit both these speculative issues out at least for now. Cryptocurrencies are, quite simply, Tulipmania 2018. But, depending on the courts and the insatiable tax-gathering greed of various state legislatures, the legalized reefer madness genie may be tough to put back in its bottle. Should Sessions’ 180 degree policy turn falter, stock, ETF and even commodities futures opportunities may yet lie ahead for farmers and purveyors of the Evil Weed.
Given the suddenly renewed interest in recreational marijuana and marijuana stocks, we’ll be back in the near future to explore the (possibly) wonderful and definitely speculative world of marijuana stocks.