Democrats in Control: The Impact on the Cannabis Industry

Georgia’s January 5th election results, which flipped the Senate to Democratic control, have created a great deal of optimism for the cannabis industry. The market for legal U.S. cannabis products is forecasted to more than double to a valuation of $41.5 billion by 2025, according to New Frontier Data.

In November, cannabis stocks soared after Joe Biden’s presidential win and the legalization of recreational marijuana in Arizona, Montana, New Jersey, and South Dakota. So far, 15 states and the District of Columbia have legalized marijuana for adult recreational use, and 36 states permit medical use of the drug. Oregon is the first to have decriminalized hard drugs.

For the first time since 2008, Democrats have control of both the White House and Congress, turning attention towards what the results of this year’s elections could mean for the future of cannabis policy reform. 

During the 2020 presidential election, the Biden-Harris campaign touted their support for cannabis decriminalization, and Senate Majority Leader Chuck Schumer said that he will push to pass sweeping legislation that would end the federal prohibition of marijuana. 

Over the past eight years, Democratic party politicians have become better informed on the details of cannabis policy and reform. In particular, the Congressional Black and Latino caucuses have kept a close eye on how legalization has unfolded in certain states, and the need for racial and social equity to repair some of the damage caused to predominantly Black and Latino communities under marijuana prohibition. 

“The War on Drugs has been a war on people — particularly people of color,” said a statement issued by Schumer, of New York, and Sens. Cory Booker (D-NJ) and Ron Wyden (D-OR).

“Ending the federal marijuana prohibition is necessary to right the wrongs of this failed war and end decades of harm inflicted on communities of color across the country,” they said in a joint statement. “But that alone is not enough. As states continue to legalize marijuana, we must also enact measures that will lift up people who were unfairly targeted in the War on Drugs.”

The group stated their intention to release “a unified discussion draft on comprehensive reform.” The legislation, which they plan to introduce in the coming weeks would “protect public health and implement responsible taxes and regulations.”

The statement comes as public support for the legalization of marijuana has grown. A Gallup poll in November showed that 68% of Americans, a record high, favored marijuana legalization.

In addition to politicians preparing to pass major changes to federal policy, those in the cannabis industry are prepared for a big financial boom as well. 

The day after Democrats swept both Senate seats in the Georgia runoff election, giving them a slim majority, Curaleaf Chair Boris Jordan decided to take a leap of faith by putting over 16 million shares of Curaleaf, America’s largest cannabis company, on the market overnight. His gamble paid off: the stock soared, and Curaleaf brought in $300 million in under 24 hours. The company’s big payday foreshadows how the entire cannabis industry has room for growth and is positioning itself for cannabis restrictions to be loosened significantly. 

In an interview with Politico, Andrew Kline, who recently joined the law firm Perkins Coie after serving as public policy director for the National Cannabis Industry Association, said, “there’s no stopping the industry now.” “The bigger players are going to be interested in acquiring smaller companies and becoming multi-state operators or expanding their footprint in different states.”

Although a change in control in the Senate doesn’t guarantee that any cannabis-friendly bills will pass, it certainly improves the odds for marijuana reform to take place over the next few years. For all of these reasons, investors should keep their eyes on cannabis legislation, as stocks could skyrocket in 2021.