My Doctor, Lawyer, and Wife Agree...

Why new marijuana legislation will change the industry forever...

Written by Jimmy Mengel
Posted April 3, 2019 at 8:00PM

The two most frightening words in Washington are 'bipartisan consensus.' Bipartisan consensus is when my doctor and my lawyer agree with my wife that I need help.

- P.J. O’Rourke

As funny as Mr. O’Rourke is, I think that — when it comes to cannabis law — he couldn’t be more wrong. Bipartisan consensus is going to drive the next round of pot profits, and the first shots have already been fired.

If I had to rewrite his aphorism, it would read:

The two most beautiful words in marijuana investing are 'bipartisan consensus'. It’s when my bankers, brokers and my legal business can actually work together to make everyone money!

At long last, the government seems to agree on one thing: marijuana shouldn’t be federally illegal. If it is successful with its most recent bill, we could be off to the races.

It could be the beginning of the biggest pot stock boom in history...

The big cannabis news rushing out of Washington, D.C. last week was about one of the biggest challenges cannabis companies face: banking.

In years past, many banks wouldn’t touch cannabis with a 10-foot pole. That may finally be about to change.

The House Financial Services Committee approved landmark legislation aimed at helping banks and other financial institutions count marijuana businesses as clients. The bill would shield banks from federal regulatory penalties if they serve marijuana businesses that are legalized at the state level.

The bill was sponsored by Reps. Ed Perlmutter (D-Colo.) and Denny Heck (D-Wash.), but with a nice bipartisan touch as Rep. Steve Stivers (R-Ohio) included an amendment that would extend the same treatment to insurers.

Now it must pass through the Senate.

That is step one. The next one will be the legislation to end the federal prohibition of cannabis. That could come sooner than we think…

House Rules Committee Chairman James McGovern (D-MA) gave a telling interview Wednesday, where he predicted this vote’s passage and went even further, saying “in a relatively short time, within the next several weeks, and I think we will have a very strong vote.”

“We will guide it to the House floor for a vote — which I think it will pass with an overwhelming vote — Democrats and I think a lot of Republicans as well.”

The House Rules Committee decides how legislation is handled on the floor and holds a lot of sway.

These are major developments in an industry that — despite widespread legalization, support, and undeniable financial implications for the American economy — has continued to operate in the shadows.

Most companies have had to operate in cash — which is not only dangerous, but costly, as companies have had to hire armed security to courier thousands in cash on a daily basis. It simply doesn't make any sense.

I think the time has finally come for the government to step away from a lucrative and legal business.

This legislation would legitimize the entire industry and lead to millions in institutional investing, and it will be huge for the pot companies that operate in the United States.

I recently spent time with Republican Rep. Dana Rohrabacher from California. He failed six times to pass his pro-cannabis bill before succeeding with the famous Rohrabacher–Farr amendment that passed in 2014. It has protected medical cannabis companies from being raided by the federal government ever since. It was the very first time that the House or the Senate voted to protect medical cannabis patients.

But it was only the first shot fired in the battle to legalize cannabis countrywide. Many other shots will be fired this year, and I believe 2019 will be the year that the war is officially over.

The bills being put forth by Congress this year are very bipartisan. While our politicians cannot seem to agree on anything else, it looks like marijuana may be the one issue that they can cross the aisle on…

Who would have guessed?

Next up is the CARERS Act, sponsored by Steve Cohen (D-Tenn.) and Don Young (R-Alaska), which would expand marijuana research and give VA doctors the power to recommend cannabis treatment for veterans.

The bill would require the federal government to allow states to legalize and regulate their own medical marijuana markets. More importantly, it would allow the U.S. Department of Veterans Affairs to issue medical marijuana recommendations for its patients, which it hasn’t been able to do in the past.

The second big bill to hit Congress this year is the “Regulate Marijuana like Alcohol Act.”

The bill would remove cannabis from the federal Controlled Substances Act, which would remove the single-biggest hurdle that cannabis faces today. Right now, marijuana is still federally illegal.

Cannabis is categorized as a Schedule I substance, which means that it has “high abuse potential, no medical use, and severe safety concerns.” That means that marijuana is lumped in with dangerous drugs like heroin, LSD, and cocaine.

Once that stigma goes away, we'll start seeing the true renaissance of pot stocks. 

All of these initiatives will legitimize the industry, which means institutional money can begin flowing into the investment space. It means that ETFs will start cropping up. It means that new companies will be able to grow without the threat of being shut down by the Feds. 

I suggest you position yourself long before these bills are passed. 

Here are five companies you can prepare with...

Godspeed,
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Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of the personal finance advisory, The Crow's Nest, and cannabis stocks advisory, The Marijuana Manifesto. For more on Jimmy, check out his editor's page.

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