The Genie is Out of the Bottle

Why Trump Won't Stop Legal Marijuana

Written by Jimmy Mengel
Posted February 28, 2017 at 9:35PM

The genie is out of the bottle…

Legal marijuana is here to stay, and marijuana investing will continue be the greatest moneymaking opportunity of our lives.

Do not fear the latest fearmongering coming from the Feds.

If you haven’t heard yet, legal marijuana came up during a White House press briefing. When asked if the Trump administration would crack down on states that allow legal recreational marijuana, Sean Spicer said:

"I do believe you will see greater enforcement of it.”

For those who aren’t aware, while states have been free to pass legalized marijuana laws, the federal laws still recognize marijuana as a schedule I controlled substance — which is still technically illegal. The Feds can go after legal cannabis companies: raiding shops, destroying farms, and busting up medical marijuana operations.

Now, as a marijuana investor who runs a marijuana investing newsletter, that statement is obviously not music to my ears.

In fact, after Spicer made the remarks, many of my stocks dropped 5 to 10%.

But instead of panicking, I simply doubled down on the industry that some say will “create more millionaires than Microsoft."

There are simply too many political and social reasons that cracking down on it from the federal level doesn't make sense. It would destroy thousands of well-paying U.S. jobs, steal away a huge amount of state tax dollars, and anger a population that has clearly embraced legalized marijuana with its votes.

That’s why I’d say you should start investing in marijuana right now...

First off — Trump himself campaigned on the fact that states should be able to make the laws they see fit for their citizens.

"In terms of marijuana and legalization, I think that should be a state issue, state-by-state," he said in October.

He also mentioned that he was “in favor of medical marijuana 100%.”

I seriously doubt Trump is going to spend one iota of his dwindling political capital on cracking down on states' rights that he clearly supported during his campaign. Recent surveys show that over 60% of the country is in favor of legalization — the highest ever recorded. 

"Picking a fight with the growing number of states that are enacting popularly supported marijuana laws would be a huge distraction that the White House just does not need right now. We're way more popular than they are," according to Paul Armentano, deputy director of the advocacy group NORML.

Secondly, his attorney general, Jeff Sessions — who is notoriously anti-legalization — hasn’t given any good reasons for a federal crackdown. He did mention that he has been informed that violence has increased in areas with marijuana legalization.

“We’re seeing real violence around that. Experts are telling me there’s more violence around marijuana than one would think and there’s big money involved.”

He’s right about one thing — there is big money involved, which is why I’m so bullish on it. But he is completely wrong about violent crime. Violent crime has actually decreased in states that have legalized cannabis. Not only has legalizing a product that used to be sold by criminal gangs and foreign cartels cut down on crime and violence, it has actually lowered youth access to marijuana and resulted in far fewer arrests.

A new study also suggests that states with medical marijuana laws on the books have fewer traffic fatalities, particularly among young drivers.

So if Sessions even thinks about sending his goons to close up legally operating shops and facilities, he’ll be met with a slew of facts that prove otherwise.

Sessions also admitted that "States can pass the laws they choose.”

Thirdly, even members of his own party are speaking out against the idea of a federal crackdown…

Colorado Governor John Hickenlooper — who was against legalization in his state — has recognized the value and urged the government to let the states do what is best for them.

"I opposed the legalization of recreational marijuana in Colorado. I spoke openly against it, but it passed in Colorado by 55 to 45%. It is now part of our constitution," Hickenlooper said last week.

"I think it's the wrong time to pull back from this experiment, and if the federal government's going to come and begin closing in and arresting people that are doing what's legal in different states, my God, it creates a level of conflict that's going to be very difficult."

Democrats tend to agree even more...

Senator Ron Wyden, a Democrat from Oregon, urged the federal government to "respect the decisions of Oregon voters."

"The Trump administration is threatening states' rights, including the rights of one in five Americans who live in a state where marijuana is legal," he said. "I will fight hard against ridiculous federal government intrusions into our state."

He won’t be the only one, I assure you...

The point is, political figures who represent the states that have seen so much prosperity from the new industry are lining up to fight against any federal intervention in their business.

It’s mostly because the industry is not only extremely popular with their constituencies, it has also brought tons of new jobs and tax revenue to their states…

Trump ran on bringing good jobs back to American workers. No other new industry has done as great a job at fulfilling that promise than the legal cannabis industry.

In fact — according to the Department of Labor and Statistics themselves — legal cannabis will account for more new jobs than the government, manufacturing, or utilities.

“These numbers confirm that cannabis is a major economic driver and job creation engine for the U.S. economy. While we see a potential drop in total number of U.S. jobs created in 2017, as reported by Kiplinger, as well as an overall expected drop in GDP growth, the cannabis industry continues to be a positive contributing factor to growth at a time of potential decline,” according to Giadha Aguirre De Carcer, founder and CEO of New Frontier Data.

She went on to say that even if there were a chilling of the industry over the next couple of years, projected total market sales are “expected to exceed $24 billion by 2025, with the possibility of almost 300,000 jobs by 2020.”

And with big business comes big taxes, and the legal marijuana industry is raking them in…

In Colorado alone, legal marijuana sales reached $996 million last year, bringing in $163 million in tax dollars. That makes it the second largest revenue source — three times larger than alcohol, and 14% larger than casinos. According to the Marijuana Policy Group, marijuana tax revenues will overtake cigarettes by 2020.

Washington State brought in $77 million its first year — which is impressive — but that figure is projected to jump to around $270 million this year.

But California will hit the jackpot: some state analysts estimate local governments could see $1 billion in revenue from the production and legal sale of marijuana.

Once the Pandora’s Box of billions in tax revenue is opened, I don’t think even the “reefer madness” of someone like Jeff Sessions can close it.

Godspeed,
jimmy-mengel-signature-fixed

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. You may also know him as the architect behind the wildly popular finance and investing website Wealth Wire, where he's brought readers the stories behind the mainstream financial news each and every day. For more on Jimmy, check out his editor's page.

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