Years ago, as a college student in West Virginia, my friends and I could only buy 3.2% alcohol beer. We had to cross into Pennsylvania to buy ‘real beer’.
About once a month, we’d drive to Pennsylvania, load up the car with case after case of beer, and head back to West Virginia with a full supply of the good stuff.
Regulations like 3.2% versus 5% beer were a leftover effect of the one-by-one state alcohol laws that came on the books after the repeal of alcohol Prohibition in 1933.
I want you to take a minute and think of 2017 like 1933.
Prohibition has just been ‘repealed’. Only this time, it’s marijuana and not alcohol.
The repeal of Prohibition didn’t bring overnight solutions. You couldn’t magically walk into your corner liquor store and grab a fifth the very next day.
States implemented alcohol sales one by one. Progress came in fits and starts. Some states mandated beer couldn’t be sold above 3.2% alcohol, for instance.
The same can be said for marijuana. Every state that has already voted for medical or recreational use will take a different approach.
Some states will act quickly and wisely. Others will delay and make bad decisions.
The trend, however, is clear. The marijuana boom is here. And this is only the beginning.
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If the marijuana legalisation movement continues on its current track, pot will be a more lucrative industry than the NFL by 2020. That would mean over $10 billion in direct sales of pot, per year.
Marijuana’s performance at America’s ballot boxes on 8 November was a watershed moment. Now recreational or medical marijuana use is legal in 28 states. That’s more than half the country.
Marijuana is still regulated on a state level. But like my buddies and I in college 50 years ago, I predict that, soon, the access to marijuana will blur state lines. It’s in their best interest, really.
State governments can’t wait to get their hands on the bonanza of money that marijuana could generate. They see a substantial economic boon from legalising pot. It’s reminiscent of the early days of casino gaming legalisation across the country.
I underscored how powerful this trend will be back in December. Its cultural and political influences, and especially its economic impact, will explode like legalised alcohol did at the end of Prohibition in 1933.
That explosion led to jobs, interstate commerce, and birth an industry that today is worth hundreds of billions a year.
The road to marijuana prosperity, however, will not be a straight, smooth ride. But opportunities will abound for you — in some obvious areas and in other, more obscure ways.
Our analyst Ray Blanco agrees. Ray’s been tracking the marijuana boom for months. ‘Publicly traded marijuana companies continue to ride a wave of optimism following the 2016 elections.’ Ray points out, ‘Before the decade is out, pot could be on its way to being legal in many more states…When that happens, the tiny pioneers of this market could balloon into industry giants.’
But first, there are political, legal and business land mines to dodge.
Look no further than Massachusetts for a great example of the political red tape trying to get in the way.
It was one of four states that passed recreational pot use by healthy margins on Election Day.
But as soon as the state legislature reconvened in December, it delayed implementation of the law for six months. As The Boston Globe reported in December:
‘It took less than an hour, and only about a half-dozen state legislators, to approve a bill that would overturn significant parts of a marijuana legalization law that 1.8 million voters approved just last month.
‘With no public hearings and no formal public notice, the few lawmakers on Beacon Hill passed a measure to delay the likely opening date for recreational marijuana stores in Massachusetts by half a year — from January to July 2018.’
What a legislative sleight-of-hand crock. This was a behind-closed-doors manoeuvre that had no opposition. Governor Charlie Baker has been a loud, relentless opponent of legalisation.
But I saw this coming.
Two years ago, I forecast: ‘As evidenced by myriad existing laws and regulations often written by political hacks and bureaucratic incompetents, look for distortions of what the simple pro-pot resolution majorities voted for, on a simple ballot resolution, to fit the hacks’ personal or special-interest agendas.’
As it stands now, retail stores in Massachusetts won’t open until at least summer 2018. Growing and possessing pot is legal. You just can’t buy it legally.
Never mind that 1.8 million voters — 54% — approved the law. Lawmakers now control how it’s written and implemented.
It is a case study of why you must monitor how a referendum or law is passed and written. The political and procedural climate in states passing marijuana laws is critical. The range of differences is wide.
But that won’t stop you from making a penny off this young industry. ‘Buy the right companies now, before the big money starts rolling in, and you stand to make six figures or more,’ Ray explains.
State legislation is important, but it’s not going to sour the deal for potential marijuana millionaires.
Until next time,
For The Daily Reckoning, Australia