Sometimes I feel more like a political commentator rather than a financial writer. That’s because, by focusing on marijuana stocks, I’m forced to pay extra attention to politics.
After all, few things impact pot stocks like the political leanings of the day, as cannabis legalization across nations is the holy grail for marijuana stock investors. And with President Joe Biden’s recent remarks, all that focus may have paid off by revealing a potentially huge opportunity for pot stock investors.
Allow me to explain.
On April 28, Biden addressed a joint session of Congress, where he laid out a number of policies he’s aiming to achieve as his administration exits its first 100-day window. It’s an arbitrary window, to be sure, but one that bears some significance. Many past presidents concentrated their most ambitious policy plans in that period.
Biden is proposing a number of policies—many of which are further left than one would have thought, considering his past as a centrist—but one policy in particular should be of note for marijuana investors.
That one is his proposal for the government to invest in what he calls advanced research projects for health. Biden said the following at the joint session:
The Defense Department has an agency called DARPA – the Defense Advanced Research Projects Agency – that’s there to develop breakthroughs to enhance our national security – which led to the internet and GPS and so much more.
The National Institutes of Health, the NIH – should create a similar Advanced Research Projects Agency for health.
(Source: “Remarks as Prepared for Delivery by President Biden — Address to a Joint Session of Congress,” The White House, April 28, 2021.)
Biden, here, is saying he wants to start allocating resources towards medical research in an attempt to create a number of breakthroughs that could, among other things, help stave off the next global pandemic (wouldn’t that be nice?).
There are two ways to accomplish this. One would be through executive decree, whereby Biden could direct the National Institutes of Health to begin allocating resources towards this new department. Another way would involve going through Congress—a tall task, considering how partisan and deadlocked things have become.
If Biden opts for the first scenario, that would be a huge boon for pharmaceutical companies, no doubt likely to be partners in this endeavor in some capacity. Just look at how much public funding went to many of the largest pharma companies for COVID-19 vaccine researc. It only makes sense that they’d be brought into the fold again to help drive progress via government dollars.
And a secondary effect could be seen in marijuana stocks. How? Simple: medical pot stocks continue to hold immense promise in the industry, despite often being the forgotten cousin of the (admittedly) more exciting recreational sector.
I could pull up a host of statistics and studies showing that medical marijuana has promise in treating a number of conditions. For instance, according to one study, marijuana was shown to be a helpful source of pain relief, even helping people avoid turning to deadly and addictive opioids like fentanyl. (Source: “Pain Relief for Seniors: Benefits of Using Medical Marijuana vs. Opioids and Alcohol,” Medical Marijuana Consulting, April 26, 2021.)
With the U.S. and other countries battling a virulent opioid epidemic, medical cannabis could be a huge relief for millions of people and save many of them from facing the horrors of opioid addiction.
Of course, the major barrier standing in the way of that potentially bright future is that research into medical cannabis is currently banned in the U.S., for all intents and purposes. That’s due to the Schedule I designation of marijuana, a classification by the Drug Enforcement Administration (DEA), which states that marijuana has no medical benefit whatsoever.
That’s a pretty thoroughly debunked lie, but it doesn’t stop the mandate from being in place. And unlike U.S. marijuana legalization, which would likely require some legislation being passed through Congress (though, if Biden wanted, he could find a way around that), removing cannabis as a Schedule I drug wouldn’t take much more than a few pen strokes.
And that brings us back to Biden’s recent remarks. To me, they signal two things that marijuana stock investors ought to be aware of.
First, it signals that medical research, a long-dormant industry with few innovations being produced in recent years, could be invigorated by the government’s refocus on medical advancement. That, in turn, could expand the interest in exploring just what kind of medical benefits could come from cannabis. This would likely have a positive impact on pot stocks.
Another signal we’ve been seeing from Biden is that he’s going more progressive than his past would imply. After spending most of his career in Congress as a centrist, or even a center-right politician, his recent pivot leftward was rather unexpected.
And if he continues that leftward pivot—no matter what your politics are—it’s great news for investors of marijuana stocks, as that could mean Biden will actually make a move on federal U.S. pot legalization.
Now, I hold no illusions that Biden will support marijuana legalization in the U.S. anytime soon, but I do believe he’s more than capable of working toward decriminalizing marijuana by altering its Schedule I designation.
That alone could create a firestorm of activity in the medical marijuana sector, sending share prices soaring as people get excited about all the money and research going into novel marijuana treatments.
This is all speculation, of course. There’s frankly no hard evidence of what will happen next. But speculation has always been the name of the game for pot stock investors. Those who got in early as the industry ramped up in Canada just a few years ago have seen gains of many hundreds of percentage points.
I believe that, as the U.S. edges closer and closer to federal marijuana legalization each day, we could see another opportunity for massive gains.
A lot remains uncertain in the marijuana industry, but with Biden’s recent shift toward progressive policies, there’s a decent chance that he may change his attitude toward pot at least somewhat.
That, in turn, could significantly boost marijuana stocks, with medical marijuana stocks likely being among the largest winners.