If You Must Buy a Cannabis Stock, Canopy Growth Seems Like the One

The news for Canopy Growth (NYSE:CGC) has been mostly negative for the past two years. However CGC stock got a brief lift in May and went positive for 2020. Unfortunately following the trend of cannabis stocks for the last two years, the stock couldn’t hold the gains and was range-bound throughout the summer…

But something seems to be happening as Canopy is making another run at going green for the year. And this time, it just may stick…

Since 2018, the bullish argument for cannabis is about the United States. Within the next decade, the U.S. projects to be the largest marijuana market in the world. Sales could reach $100 million annually. There’s just one problem. And it’s a big one.

Cannabis is still illegal on the federal level. The bulls say that legalization will become a reality faster than expected. In fact, no matter how much things look the same, the unmistakable narrative from every cannabis bull for the past two years is “this time it’s different.”

This Time May Be Different

I read an interesting blog post over the weekend that briefly got me rethinking my position on cannabis. I’ve been of the belief that cannabis is a question of when, not if. But I also believe the when is a rather long way out, particularly in the United States. And that doesn’t make a bullish case for Canopy or any cannabis stock for that matter.

This article enlightened me to a couple of points that may be changing the calculus, if not the time frame, for legalization in the United States.

One reason that CGC stock is climbing came from California Senator Kamala Harris. During the vice presidential debate, Senator Harris made clear that under a Biden administration, marijuana would be decriminalized. While that’s not the same thing as making pot legal, it does seem to be a way for states to work around the Supremacy Clause of the United States Constitution.

Decriminalizing Is Not Legalizing

For those whose eyes roll at the thought of high school civics, let me try to simplify it. Marijuana is illegal on the federal level. But many states have made medical, if not medical and recreational marijuana legal in their states. The Supremacy Clause says that when state law and federal law conflict, the federal law has supremacy.

This means that individuals can be in violation of federal marijuana laws even while being compliant with state laws. And this allows federal prosecutors to put people in jail. Harris claims that in a Biden administration those prisoners (we hope only those that merit it) will be released. That would seem to remove one obstacle.

Let Banks Lend Cannabis Companies Money

Another obstacle for cannabis companies is their inability to receive financial services from U.S. banks. The Secure and Fair Enforcement (SAFE) Banking Act would allow banks to…

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