The Trump Presidency and the Marijuana Industry
Of the 9 states where voters were considering legalizing marijuana for either recreational or medical use, 8 approved the statewide measures.
California, Massachusetts, Maine and Nevada approved initiatives allowing the recreational use of cannabis, while Arkansas, Florida and North Dakota approved medical marijuana.
Montana, where the drug was already legal, passed a measure that allows commercial growing and distribution.
Only in Arizona, where voters also considered an initiative to permit recreational use, did a marijuana measure fail to pass.
On the surface this victory for marijuana legalization could result in an additional $7 to $8-B annual retail market for cannabis, according to Marijuana Business Daily, once the states get their rules set and their businesses up and running. That could take the entire 1st term of US President Elect Donald Trump.
Or it could take longer. The Republican party maintained control of both houses of Congress, and if the party lives up to its platform statement, the marijuana industry could face some serious headwinds.
Below is the Republican platform statement on marijuana, as follows:
“The progress made over the last three decades against drug abuse is eroding, whether for cultural reasons or for lack of national leadership. In many jurisdictions, marijuana is virtually legalized despite its illegality under federal law. At the other end of the drug spectrum, heroin use nearly doubled from 2003 to 2013, while deaths from heroin have quadrupled. All this highlights the continuing conflicts and contradictions in public attitudes and public policy toward illegal substances. Congress and a new administration should consider the long-range implications of these trends for public health and safety and prepare to deal with the problematic consequences.”
The US Department of Justice (DOJ) under the Obama Administration acknowledged marijuana’s status as a Schedule I drug but turned a blind eye to enforcing anti-cannabis laws.
This may not be the attitude adopted by a Trump Administration.
In California, Prop 64 passed with 56% of the vote, while in Massachusetts 53% supported Question 4 and in Maine just over 50% supported Question 1. Almost 55% supported Question 2 in Nevada. All 4 of these states were won by Democratic candidate Hillary Clinton.
The California vote could 2X the retail market for marijuana, and that is why cannabis activists focused so much attention on the state.
But the largest potential impact on publicly traded companies may come in Nevada, where recreational marijuana could lead to developing a cannabis tourist destination in Las Vegas.
GW Pharmaceuticals PLC (NASDAQ:GWPH), the largest publicly traded company working on cannabinoid prescription medicines got a price boost Wednesday The stock traded up about 3.4%, at 124.32 in a 52-wk range of 35.83 – 137.88.
Scotts Miracle-Gro Co. (NYSE:SMG) a fertilizer maker that got a lift from analysts at JPMorgan in August when they reiterated an Overweight rating on the stock and hiked their price target from 70 to 85 a share. In July the company paid $40-M to acquire a marijuana nutrient and hydroponics products maker based in Arizona. CEO, Jim Hagedorn, has said he wants to invest up to $500-M in the marijuana industry.
Scotts also bought Gavita earlier this year, which is a European company that specializes in grow lighting and hardware.
Shares of Scott’s traded up about 1% Wednesday morning to 90.00, above the 52-wk range of 62.20 – 89.98. The consensus 12-month price target is 89.00.
|NASDAQ:GWPH||130.97||11 November 2016||1.05||128.99||131.86||127.56||438,900|
|HeffX-LTN Analysis for GWPH:||Overall||Short||Intermediate||Long|
|Neutral (0.23)||Neutral (0.03)||Bullish (0.27)||Bullish (0.39)|
|HeffX-LTN Analysis for SMG:||Overall||Short||Intermediate||Long|
|Neutral (0.09)||Neutral (-0.12)||Neutral (0.02)||Bullish (0.38)|
Have a terrific week.
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