President Trump selected a U.S. senator known for his opposition to marijuana legalization to become the new attorney general for the country. Jeff Sessions raised concerns among marijuana legalization proponents during his confirmation hearings with comments such as this one: "The U.S. Congress has made the possession of marijuana in every state, and distribution of it, an illegal act. So if that's not desired any longer, Congress should pass a law to change the rule."
Now, Sessions isn't just a nominee anymore. He is the U.S. attorney general, with broad powers to enforce federal laws. What will change for the expanding medical marijuana industry? Possibly very little. Here are three reasons not to worry (too much) about marijuana stocks being negatively impacted by Jeff Sessions.
1. Trump's previous statements
Remember that the attorney general reports to the president. Sessions' views on marijuana legalization aren't nearly as important as Trump's views on it.
Trump has indicated that he is personally opposed to legalizing marijuana. However, during the presidential campaign, he said, "In terms of marijuana and legalization, I think that should be a state issue, state-by-state." He has also expressed support for legal use of medical marijuana.
During Sessions' confirmation hearings, a spokesman for the Trump administration stated that the attorney general would implement the president's agenda. It seems unlikely that Sessions would go against Trump's policies.
2. Different priorities
Even if Sessions personally wanted to pursue targeting marijuana suppliers operating in states that have legalized marijuana, he's going to have many more critical things on his plate. For one, there's defending President Trump's immigration-related executive orders in court.
Prior to Sessions being sworn in, Trump announced several other executive orders that should keep his new attorney general quite busy. He wants to intensify efforts against international drug cartels. A new national task force charged with reducing violent crime will be created. Trump also wants measures enacted to address violence directed at law enforcement.
It seems pretty clear that Trump's law enforcement priorities will take plenty of time to implement. He hasn't mentioned anything related to cracking down on individuals and businesses that are violating federal laws in states that have legalized marijuana.
3. The other governmental branches
What if Sessions does direct the Drug Enforcement Administration (DEA) to go after marijuana businesses? Even though federal laws clearly prohibit the sale of marijuana, there is legal uncertainty about the U.S. government's rights to shut down state markets. Expect states where marijuana is legal to fight in the federal court system.
Then there's Congress. Two congressmen from California, Rep. Dana Rohrabacher and Rep. Sam Farr, have successfully pushed for inclusion of an amendment into federal spending packages over the past three years that prohibits the federal government from using funds to enforce marijuana laws in states that have legalized medical marijuana. Rep. Rohrabacher and Rep. Farr are trying to keep that amendment in place.
Rep. Rohrabacher and 12 co-sponsors from both major political parties also introduced legislation titled the "Respect States Marijuana Laws Act of 2017." This bill would change the Controlled Substances Act to prioritize state law above federal laws.
There's no guarantee that these efforts by congressional representatives will gain traction, of course. However, any actions by Sessions to crack down in states where marijuana is now legalized could allow Rep. Rohrabacher and the other co-sponsors to win more support for their bill.
A reason to worry
I don't think there's much reason to worry about marijuana stocks being hurt by Jeff Sessions or the Trump administration in general. There is one reason for concern, though.
Falling cannabis prices will eventually make it more difficult for some marijuana companies to succeed. Marijuana could become just like any other commodity. Only the biggest and most differentiated companies will survive if that happens. The biggest risk for marijuana stocks probably isn't enforcement of federal anti-marijuana laws but another more universal law: the law of supply and demand.
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