It can rightly be said that America is "going green" right before our eyes. Since 2012, residents in eight states have legalized the sale of recreational, adult-use marijuana. The number of states that have legalized medical cannabis also eclipsed the halfway mark last year, with 28 in total by year's end.
Legal sales of pot are soaring as well. According to cannabis research firm ArcView, North American legal pot sales rose by 34% to $6.9 billion. ArcView continues to expect compound annual growth in marijuana of roughly 30% per year, while investment firm Cowen & Co. is forecasting up to $50 billion in legal sales by 2026 -- good for a 23%-plus compound annual growth rate over the next decade.
This new survey should make the pot industry (and marijuana stocks) happy
What's behind this exceptional growth rate, you ask? Look no further than the rapidly changing opinions of the American public. An oft-cited poll from Gallup showed that favorability toward the idea of a nationwide legalization hit 60% in 2016, representing an all-time high. By comparison, just 25% of those polled in 1995, the year before California became the first state to legalize medical cannabis, wanted to see pot legalized nationally.
However, a newly released survey (link opens PDF) from the independent Quinnipiac University really demonstrates just how strongly the American public wants to see marijuana legalized, and how certain they are that state's rights should prevail.
In particular, Quinnipiac's survey focused on three key questions. First, concerning medical marijuana, a staggering 93% of respondents suggested that medical cannabis should be legal if prescribed by a doctor, compared just 6% who opposed the idea.
Second, when asked whether marijuana should be made legal throughout the United States, 59% of respondents were in favor compared to only 36% who opposed the measure. The dissenters were Republicans (61% oppose, 35% in favor) and voters over the age of 65 (51% oppose, 42% in favor), otherwise every other party, gender, education, age, and racial group listed in Quinnipiac's survey supported its nationwide legalization.
Finally, Quinnipiac asked survey takers if they agreed with the following statement: "The government should not enforce federal laws against marijuana in states that have legalized medical or recreational marijuana use." A whopping 71% agreed with this statement as opposed to 23% who disagreed. It should be noted that there were no dissenting groups in this third question.
In other words, the American public wants to see more liberties for recreational and medical marijuana, as well as no federal intervention. Such a scenario would be utopian for pot businesses and marijuana stocks, which would be allowed to flourish without the threat of federal intervention.
The Trump administration may swim against the tide
Unfortunately, Donald Trump's administration recently signaled that it's only partially paying attention to the desires of the public. While Trump seems firmly committed to reserving states the right to decide if medical cannabis should be legal, White House press secretary Sean Spicer has signaled that the federal government will be more active in enforcing federal laws than the previous administration.
Understandably, there's a lot of gray area left to be hashed out when it comes to "enforcing federal laws." Spicer and the Trump administration haven't exactly been forthcoming with regard to defining what that means. It could entail simply beefing up enforcement on regulations in the eight adult-use states to ensure that pot remains out of the hands of minors. Then again, it could involve federal raids and/or the federal government shutting down the recreational weed industry altogether. Such actions would clearly go against what a majority of Americans would like to see, based on the Quinnipiac poll results.
Any sort of step-up in federal enforcement would almost certainly be bad news for the pot industry and investors who've been hoping to ride the rapidly growing wave of legal marijuana sales. Remember, nearly every publicly traded marijuana stock is already losing money, therefore any tightening in recreational laws would further hamper their efforts to run sustainable businesses. Mind you, this comes on top of the tax disadvantages and the inability to access basic financial services that most cannabis businesses are currently dealing with.
What remains to be seen is whether marijuana has strong enough to support at the grassroots level to coerce politicians in Washington to soften their stance. The Quinnipiac poll shows that Republicans clearly don't favor marijuana's expansion, but if enough constituents suggest that they'll switch their votes to another candidate come mid-term elections, it may incite some sort of response and reaction in Washington. The question that we can't answer right now, and what could have the future of marijuana stocks hanging by a thread, is whether that grassroots support is strong enough.