When President Biden took office in January 2021, he made a lot of big promises.
One of those promises, which can still be found on his campaign website, was to decriminalize cannabis use at the federal level:
Biden will work with Congress to reform federal sentencing and provide incentives to state and local systems to do the same. He will end, once and for all, the federal crack and powder cocaine disparity, decriminalize the use of cannabis and automatically expunge all prior cannabis use convictions, and end all incarceration for drug use alone and instead divert individuals to drug courts and treatment.
He also said he wanted to reschedule the plant and expunge sentences for those convicted of federal possession of marijuana.
And for the most part, he's made headway on those promises, something cannabis advocates have cheered.
Last October, Biden announced a sweeping pardon for those with possession charges.
But investors in marijuana stocks haven't been so lucky.
Last year, some of the biggest names in the industry were hit hard after post-pandemic sales slumped.
At one point last year, Canopy Growth Corp. (NASDAQ: CGC) was down 65% year to date, Aurora Cannabis (NASDAQ: ACB) was down 35%, Tilray (NASDAQ: TLRY) was down 15%, and Cronos Group (NASDAQ: CRON) was down 45%. The AdvisorShares Pure U.S. Cannabis ETF (NYSEARCA: MSOS) a marijuana ETF that tracks the industry was down 52% at the start of 2023.
With the industry floundering, the question on everyone's mind is this: Will weed be federally legalized?
It's a bold prediction, but our sources are pointing to a resounding yes and soon.
So what does that mean for pot stocks?
The marijuana industry poses an interesting problem to lawmakers and investors alike.
In theory, lawmakers want to pass legislation that aligns with their constituents' desires.
A recent survey from Key Investment Partners a Colorado-based company that provides institutional-level capital to private cannabis companies a whopping 90% of U.S. adults say marijuana should not be illegal.
Logically, it should follow that politicians will get behind the reefer.
As for investors, the cannabis space represents a burgeoning industry.
But the problem is it already experienced a massive boom-and-bust cycle from around 2016-2018.
And a lot of investors lost their shirts in a frenzy akin to the dot-com bubble. It was magnified by the fact that younger and inexperienced investors were hopping on board looking to earn 10x their money. While some of them did, many were left holding the bag.
So now that valuations are depressed, pot stocks may look attractive to some.
But there's one glaring problem here...