Marijuana: it was once a taboo topic, but is no longer.
According to a newly released study from national pollster Gallup, more Americans than ever have tried marijuana.
Gallup has been sporadically asking Americans if they had tried cannabis over the past 48 years. Back in 1969, just 4% of respondents claimed to have tried the drug. By 1999, just a few years after California became the first state to legalize medical cannabis for compassionate use, about a third (34%) of respondents had claimed to have tried marijuana before. However, between the mid-1980s and 2010, this figure was essentially static, give or take a few percent. According to Gallup's July 2017 survey, 45% of Americans have now tried marijuana, an all-time high. If Gallup's profile is consistent with that of America, then, utilizing data from the U.S. Census Bureau in 2016, more than 112 million adults have tried marijuana at least once in their lives.
Along those same lines, Gallup also asked its respondents if they were current marijuana users. In 2013, just 7% affirmed that they used marijuana on a somewhat regular basis. However, in the 2017 poll, 12%, or roughly one out of eight Americans, admitted to regularly smoking cannabis. Interestingly, this was down 1% from 2016, albeit still well within the standard margins for error in polling.
Five likely reasons why more Americans than ever are trying marijuana
So, this begets the question: Why are more people experimenting with marijuana than ever before? The answer probably lies with a confluence of factors.
For starters, we've witnessed a notable shift in the way the American public views marijuana over the past two decades. Gallup, which has also polled Americans on their views regarding legalization for the past 48 years, has shown that favorability toward legalization has soared recently. After just 25% of the public favored its nationwide legalization in 1995, 60% were in support of such a move in its 2016 survey, an all-time high.
The expansion of medical cannabis and recreational weed in select U.S. states, along with the end of the war on drugs, has also likely encouraged experimentation with the drug. Since 1996, 29 states have legalized medical cannabis, including Ohio and Pennsylvania last year, which did so entirely through the legislative process (i.e., without putting the measure on a ballot for residents to vote on). Eight states have legalized recreational weed since November 2012. Expansion gives Americans a legal means to try pot or, in rarer instances, become a regular legal consumer.
Select state governments could also be behind higher experimentation rates. It's no secret that certain states struggle to balance their budgets, thusly legal cannabis acts as a new stream of tax revenue and fees that can help close or ebb budget deficits. States like Nevada, which only recently opened their doors to recreational marijuana, are counting on tax revenue from the sale of legal weed in order to make ends meet.
We can probably also point to politicians for increasing the experimentation rate. Even though marijuana is entirely illegal at the federal level, this past November was the first presidential election cycle where marijuana was a mainstream topic for the candidates. It cemented the idea that pot was no longer a taboo topic that could be avoided by our nation's lawmakers.
Lastly, the advancement of medical cannabis and cannabinoid-based drugs in clinical trials has probably cast a more favorable view on marijuana. GW Pharmaceuticals (NASDAQ:GWPH) is attempting to bring the very first cannabis-derived drug to market next year. The cannabidiol-based oral drug, known as Epidiolex, breezed through multiple pivotal-stage studies in two rare types of childhood-onset epilepsy, Dravet syndrome and Lennox-Gastaut syndrome. Clinical studies from GW Pharmaceuticals, along with more informal research studies from universities, have painted a picture that suggests marijuana could be helpful, not harmful, in treating certain diseases.
Despite weed's growing popularity, the federal government has dug in its heels
However, it's also worth pointing out that in spite of more Americans than ever having tried marijuana, any chance for change in the federal government's scheduling of the drug still seems to be a ways off.
One issue is Attorney General Jeff Sessions, who is among the most ardent opponents of marijuana. It was uncovered in June that Sessions had sent congressional leaders a letter in May requesting that they repeal the Rohrabacher-Farr Amendment, which protects legally operating cannabis businesses in legal states. In other words, Sessions requested permission from Congress to trample states' rights and go after medical marijuana businesses.
Another issue is that Congress has far too much on its plate to concern itself with marijuana legislation. Republicans have been working on healthcare reform for more than five months, while tax reform talks have been progressing at a snail's pace. Of the multitude of things that President Trump wants to accomplish as president, legalizing marijuana isn't remotely on the list as of now.
The U.S. Drug Enforcement Agency (DEA) is probably of little help, too. Last year, the DEA had an opportunity to review two petitions that requested the scheduling for marijuana be changed. The DEA declined to do so, citing a lack of clinical evidence on the benefits and risks of the drug, as well as a lack of proper usage oversight.
There's a Catch-22 as well. Most lawmakers, along with the DEA, want more clinical data to pore over in order to make an educated decision about weed's scheduling. Unfortunately, its restrictive scheduling also makes running the studies that are needed very difficult. You could almost say that red tape is ensuring that marijuana remains an illegal substance.
Investing in marijuana is a highly risky venture
Even with a record number of people experimenting with pot, and legal sales expected to grow by a double-digit percentage for the next five to 10 years, investing in marijuana stocks will remain a risky venture at best.
There are a number of concerns with marijuana companies that simply aren't going away anytime soon. For example, weed companies have little or no access to basic banking services, such as a line of credit or even a checking account. This forces marijuana companies to deal solely with cash, which is a big security risk and an inhibitor of growth.
Also, the Internal Revenue Service doesn't look too kindly on profitable pot companies. U.S. tax code 280E disallows businesses that sell an illegal substance, like marijuana, from taking normal corporate income tax deductions. Thus, if a weed business does turn a profit, it's likely handing over far more in taxes than a "normal" business.
The result for most marijuana stocks is steady losses with no chance of really thriving until the federal government changes its stance on pot. Unfortunately, it's unclear when, if ever, that's going to happen.