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If you’ve followed along with me for even a short time, then you already know that I have a tendency to make bold predictions.
Here’s the thing. I’m convinced – and I have the track record to prove it – that to consistently crush the market, you have to be willing to buck the in-crowd on Wall Street and in Washington.
For me, it’s all about innovation. I always say that the road to wealth is paved with tech, and that’s why I’m always excited about bold new sectors that mainstream big investors might still be cautious about. I expect that 2020 is going to be an outstanding year for Bitcoin and other cryptocurrencies. Along with that, I’m expecting big things from the legal cannabis sector in this coming year.
But let’s be honest, it’s gotten much more difficult to cash in on cannabis because the sector is out of favor. With that in mind, let’s take a look at the situation facing the cannabis sector as we move into 2020…
Prospects and Problems
There are three main challenges facing the cannabis industry right now:
- The crisis over hundreds of reported vaping illnesses.
- Recent (but thankfully fading) concerns about global economic growth and the impact on this young, burgeoning industry.
- Lack of political action out of Washington.
The first item on the list “May Be Coming to an End” according to the CDC via Time Magazine, so I’m not going to discuss that today.
Now then, as regards fears of slowing global growth, I think we can finally say that that the market is starting to get over them.
I say that because, with the jobs market having just turned in the best numbers in 50 years, the larger investing world is coming around to what I’ve been saying all along. Consumers are employed and spending, and that’s going to mean a strong economy no matter how much tension other factors are creating.
In the meantime, the House has voted to impeach President Trump along partisan lines, and that is keeping us from getting a nice catalyst out of Washington.
Irony abounds. In November, the U.S. House Judiciary Committee approved a sweeping cannabis reform bill by a 24-10 vote. It’s called the MORE Act of 2019, which stands for Marijuana Opportunity Reinvestment and Expungement Act.
Were it to pass Congress and become law, the MORE Act would be a boon to the industry. Among other things, it would open business opportunities for legal marijuana nationwide.
We saw some cannabis stock rally last year with the passage of the Farm Bill. The law removed hemp and CBD-related products from the Controlled Substances Act.
While I am happy to see the MORE Act move forward, I believe we need to be realistic about its chances of passing.
This is my take on the matter. While the House remains focused on impeaching the president, there is little will to pass cannabis reform legislation.
And if the House does pass the Act this year, it’s almost certain to die in the Senate. In the upper chamber, they are preparing for an impeachment trial.
Yes, I know the trial likely won’t last more than two or three weeks. But after that, I see little in the way of bipartisan cooperation in a tough 2020 election year.
We also need to be mindful of a competing bill that has garnered at least some support among conservatives. It’s the States Act, which would come close to full legalization,
Based on the 10th Amending granting rights to the states, the act basically would mean de-facto national legalization. That’s because the federal government would no longer have the power to intervene in states that have approved marijuana use.
Here’s my take on the matter; getting the MORE Act out of committee is a big victory. It means that what I have been predicting for some time now will in fact come to pass.
Make my words, marijuana will become fully legal in the U.S. And that will be a huge move for the entire world.
We’re already seeing movement along those lines in Europe and Latin America, where a number of nations have approved medical use.
But leaders there are keeping a sharp eye on the U.S. – we’re not only the world’s largest economy, but we’ve also had an anti-cannabis history going back decades.
In the interim, a backend investment into cannabis can do well in what, until recently, has been a very challenging market.
The Scott’s Miracle-Gro Co. (SMG), for example, is a leader in hydroponic systems for indoor agriculture, with a big emphasis on cannabis. Trade has been a bit choppy for this stock of late.
That’s because the ag sector has been a little out of favor right now during our trade dispute with China, which is a big importer of farm products. And Scott’s recently reported third-quarter earnings that underwhelmed Wall Street.
But I’m hoping that recent positive signs on trade negotiation will help turn that situation around.