The marijuana market is really budding before our eyes in North America. Cannabis research firm ArcView, in partnership with BDS Analytics, notes that North American legal weed sales catapulted higher by 33% in 2017 to $9.7 billion. By 2021, this figure is expected to grow to $24.5 billion, representing a compound annual growth rate of 28%. These rapid sales growth figures have been pivotal to driving marijuana stock valuations ever higher.

In addition to sales growth expectations for pot, there's been a noticeable shift in the way consumers view the once-taboo drug. In the U.S., Gallup finds that 64% of respondents now favor legalization, up from just 25% back in 1995, the year before California became the first state to OK the use of medicinal marijuana for compassionate-use patients. The thesis has long been that a shift in opinion would eventually trickle its way into Congress and coerce change. However, it hasn't exactly worked that way in the United States.

A cannabis leaf next to a tipped over bottle of dried cannabis.

Image source: Getty Images.

Despite burgeoning support for cannabis among the public, lawmakers in Washington have retained the Schedule I classification for marijuana. This scheduling means it's entirely illegal, highly prone to abuse, and has no recognized medical benefits.

What's more, this Schedule I classification makes operating a business in the cannabis space quite difficult in the United States. Marijuana-based businesses are unable to take normal corporate income tax deductions (per U.S. tax code 280E) since they're selling a federally illegal substance, and most businesses have limited or no access to basic banking services, which even includes something as simple as a checking account.

Jeff Sessions and the GOP halt marijuana's progress on Capitol Hill

Leading the charge in keeping marijuana's U.S. expansion at bay for years has been the Republican Party. In all national polls, the GOP holds a less favorable view of cannabis relative to those folks who identity as Democrat or Independent. Even though the October 2017 Gallup poll showed that respondents who identified with the GOP supported legalization for the first time ever, that favorability is still within the margin of error to be below 50%. In short, the GOP has been pretty pivotal in stalling pot's progress on Capitol Hill. 

And at the center of it all is Attorney General Jeff Sessions, who may very well be the most ardent opponent of marijuana on Capitol Hill. Last year, Sessions sent a letter to a few congressional colleagues requesting that the Rohrabacher-Farr Amendment, which is what protects medical marijuana businesses in legal states from federal prosecution, be repealed. His request proved unsuccessful.

Jeff Sessions, surrounded by six men and women, speaking at a podium and addressing an audience.

Jeff Sessions addressing an audience. Image source: Jeff Sessions' Senate webpage.

Sessions was, however, able to rescind the Cole memo in early January 2018. This memo outlined a loose set of rules that legalizing states would have to follow in order to keep the federal government out of their hair, so to speak. These rules included the need to keep weed out of the hands of adolescents, as well as keeping cannabis grown in a state within that state. Its rescinding opens the door for state prosecutors to use their discretion in bringing charges against businesses and individuals who violate the Controlled Substances Act. 

As long as the GOP controls Congress, it would appear that the cannabis industry has little to no hope of advancement. Or so it seems.

This key GOP Senator aims to legalize industrial hemp

On March 26, 2018, U.S. Senate Majority Leader Mitch McConnell (R-Ky.) announced his intention to propose legalizing industrial hemp as an agricultural commodity via the Hemp Farming Act of 2018. Sen. Rand Paul (R-Ky.) is co-sponsoring the bill, along with a bipartisan group of senators.

This move by McConnell shouldn't actually be that much of a surprise given that he successfully lobbied to add language to the 2014 Farm Bill annual spending package that protected industrial hemp research programs from interference by the federal government. McConnell's newest bill would simply make those protections permanent, as well as expand what could be done with hemp, which is used in the making of rope, clothes, paper, food, and home insulation, to name a few uses. As noted in McConnell's press release on his Senate webpage:

This legislation also will remove the federal barriers in place that have stifled the industry, which will help expand the domestic production of hemp. It will also give hemp researchers the chance to apply for competitive federal grants from the U.S. Department of Agriculture -- allowing them to continue their impressive work with the support of federal research dollars. 

An outdoor hemp grow farm.

Image source: Getty Images.

Understandably, this would be a baby step forward for the GOP as hemp and marijuana aren't as closely related as you might think. Dry hemp contains very small amounts (0.3%) of tetrahydrocannabinol (THC), the psychoactive component of the cannabis plant, can be grown outdoors in a variety of climates, and has plenty of industrial uses. Meanwhile, traditional marijuana can contain up to 30% THC, requires a very specific and controlled climate to grow optimally, and doesn't have the aforementioned long list of industrial uses to back it up. 

Still, who would have thought that Sen. McConnell of all GOP lawmakers would lead the charge for hemp?

A decent chance for passage?

The big question, of course, is whether the Hemp Farming Act of 2018 has any shot of passing. To that end, I do believe the answer is yes.

Unlike the burgeoning marijuana industry, hemp has industrial uses that can be validated, and it also has a considerably low THC content, which, in my opinion, is unlikely to concern Attorney General Sessions. What's more, the hemp industry is considerably smaller on a dollar scale than legal cannabis would be, making it more likely than not that Sessions wouldn't oppose this legislation.

Then again, nothing is a given when it comes to lawmaking or with Sessions. When rescinding the Cole memo, Sessions also tossed out potential protections for industrial hemp producers, along with medical and recreational marijuana growers. Sessions hasn't ever made his opinion on hemp publicly clear, though we know full well how he feels about cannabis.

A researcher making notes on a clipboard in the middle of a hemp grow farm.

Image source: Getty Images.

Should industrial hemp get the all-clear from the federal government, the only potential publicly traded winner looks to be Medical Marijuana Inc. (OTC:MJNA), which markets and distributes hemp oil-based products, as well as researches cannabinoid-based pharmaceuticals. Given that hemp contains considerably higher cannabidiol content relative to the cannabis plant -- cannabidiol, or CBD, is the non-psychoactive component known for its medical benefits -- paving the way for industrial hemp and continued research could allow Medical Marijuana's business in the U.S. to build momentum. Then again, Medical Marijuana Inc. is still losing millions of dollars each quarter, so it's not exactly a company that I'd suggest even aggressive investors consider at the moment. 

For the time being, the best course of action is for investors to wait on the sidelines and see how Jeff Sessions responds to the introduction of the Hemp Farming Act of 2018.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.