Cannabis Markets

Cannabis Legalization: The Clear Winner From Election Day

Film director Louis Gasnier was a pioneer.

In the early days of American cinema, he was on the leading edge of new trends and was famously prolific.

French journalist and cinema historian Georges Sadoul wrote that Gasnier directed between 100 and 200 films from 1909 to 1914.

Gasnier’s bread and butter were “damsel in distress” serials, such as international hits like The Perils of Pauline and The Exploits of Elaine.

But those are only footnotes in his legacy.

Gasnier isn’t remembered for his successes. He’s remembered for what’s considered one of the worst films of all time – the 1936 propaganda film Reefer Madness.

The ludicrous melodrama warns parents and teenagers about the horrors of pot. And it even had a hand in shaping global policy.

The high schoolers in Reefer Madness smoke weed and then quickly tumble down a rabbit hole of ruin. They start going to jazz clubs (Gasp!) before rapidly escalating to attempted rape, manslaughter, suicide and, ultimately, a descent into madness…

It’s cinematic propaganda on steroids. And it fed into the public’s hysteria surrounding cannabis at the time.

That led up to the 1937 Marihuana Tax Act, which essentially banned cannabis across the United States.

Now, not even 100 years later, cooler heads have prevailed. The needle is rapidly moving in the other direction – away from Gasnier’s “legacy.”

A Reefer Reversal

On Monday, the Dow, Nasdaq and S&P 500 all rocketed to new all-time highs.

A winner in the U.S. presidential election, as well as some very positive COVID-19 vaccine results from Pfizer (NYSE: PFE), sparked a massive rally.

In the weeks leading up to the election, I said no matter who won the White House, cannabis would be the clear winner on Election Day.

And that’s exactly what unfolded!

Five states had legalization measures on their ballots.

And after the votes were counted, it was a landslide for cannabis!

Arizona, Montana, New Jersey and South Dakota greenlit adult-use.

Meanwhile, Mississippi gave the thumbs-up to medical.

In the blink of an eye, 15 states and the District of Columbia now allow for adult-use. At the same time, 36 allow for medical use, and 47 states allow for legal possession or some form of decriminalization.

This is a pretty significant milestone. The medical legalization movement in this country began in 1996 when California became the first state to legalize medical use.

But the adult-use movement isn’t even a decade old.

Just four years ago, in the 2016 election, four states legalized adult-use: California, Maine, Massachusetts and Nevada.

And in the 2012 election, Colorado and Washington became the first two states in the country to legalize recreational use.

But those historic Colorado and Washington votes are very important. Since these states greenlit adult-use, support for cannabis legalization has risen 20 percentage points to a new all-time high!

This is why we’re seeing the market expand at a more rapid pace with each election. And already, just days after the election, more states are clamoring to join the legalization ranks.

In fact, Connecticut, which is surrounded by adult-use states, is potentially considering legalization as soon as 2021!

Marijuana’s $9 Billion Momentum

Here at Profit Trends, we were one of the first to start covering the legal cannabis markets.

We’ve survived the highs and the lows.

And I’ve remained firm on my conviction that the global cannabis market could be worth $200 billion by 2030. The U.S. would represent roughly $80 billion of that.

These five new states could add as much as $9 billion in new revenue to the U.S. cannabis market by 2025.

So we’re well on our way to the levels I’ve been pounding the table about for years.

This year, it’s been a roller-coaster ride for cannabis companies.

But over the past month, the AdvisorShares Pure US Cannabis ETF (NYSE: MSOS) is up nearly 27%. And even the Canadian licensed producers of the Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF) have kept pace with that rally!
Cannabis Stocks vs S&P 500It’s an exciting, historic moment for the cannabis industry. Not overlooking the fact that Vice President-elect Kamala Harris is one of the lead sponsors on the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019 waiting to be voted on in Congress.

And the timing of the election couldn’t have been better. Because the big moves are far from over for the cannabis sector right now… It’s time for earnings!

More than 20 pot stocks will report earnings this week. Now, this doesn’t only include Canada’s “Big Three” – Aurora Cannabis (NYSE: ACB), Canopy Growth Corp. (NYSE: CGC) and Tilray (Nasdaq: TLRY) – which reported yesterday.

It also includes major American multistate operators Green Thumb Industries (OTC: GTBIF) and Harvest Health & Recreation (OTC: HRVSF), as well as pick-and-shovel plays like the largest hydroponics retailer in the U.S., GrowGeneration (Nasdaq: GRWG).

Prior to the 1930s, cannabis was commonly used around the world for industrial, medical and even recreational uses.

And today, Reefer Madness is mostly recognized for what it truly is – outlandish propaganda.

It’s widely mocked for its laughable depictions.

And attitudes toward cannabis have reverted to what they were prior to the fearmongering of the last century.

More importantly, as these attitudes are changing, our portfolios are growing.

Here’s to high returns,

Matthew