Growth in the North American legal weed industry has been nothing short of incredible. Last year, legal cannabis sales in North America grew by 33%, to $9.7 billion, with research firm ArcView predicting that sales could expand to more than $47 billion in a decade. This rapid expansion, along with Canada being on the verge of legalizing recreational marijuana, is what has led investors in droves to marijuana stocks.
However, cannabis acceptance tends to vary quite dramatically by country. In Uruguay, marijuana is fully legal, and in Canada it's been legal from a medical perspective since 2001. Comparatively, some southeastern Asian nations could impose the death penalty for the possession of cannabis.
Is smoking marijuana morally acceptable in the United States?
Where does the United States stand on marijuana consumption, you ask? That's a question national pollster Gallup sought to answer with the release of its newest survey. Gallup questioned more than 1,000 adults from across the country on 21 topics. Respondents were asked to note whether they believed the topic was "morally acceptable" or "morally wrong." Among these 21 topics was the "consumption of alcohol," as well as "smoking marijuana."
According to the results, 78% of respondents believe it's morally OK to consume alcohol, with just 19% finding it morally wrong. Comparatively, 65% of those surveyed believe that smoking marijuana is morally acceptable compared to 31% who don't believe so. For added context, smoking marijuana was viewed as being more morally acceptable than the death penalty (62% morally acceptable), doctor-assisted suicide (54% morally acceptable), and abortion (43% morally acceptable), to name a few of the many topics that landed below smoking marijuana in the morality column.
Should this data surprise anyone? Not really -- at least if you've paid attention to Gallup's previous polls on cannabis. In October 2017, Gallup noted that an all-time high of 64% of respondents favored the idea of legalizing marijuana, which is pretty consistent with the 65% who believe it to be morally acceptable to smoke. Amazingly, only 25% of respondents favored legalizing weed in the U.S. just 23 years ago per Gallup's surveys, demonstrating how far we've come in such a short period of time.
Of course, Gallup's newest survey on the moral acceptance of smoking cannabis demonstrated a long-running trend -- namely, that folks who identify as "conservative" tend to have a more negative view of marijuana. In its survey, Gallup points out that people who identified as "liberal" or "moderate" felt that smoking marijuana was acceptable a respective 81% and 75% of the time. As for self-labeled "conservatives," 47% believed it to be acceptable, while 49% labeled it as morally wrong.
We've come so far, yet still have much further to go
In many ways, this survey adds to the growing belief that marijuana should be rescheduled or removed from the controlled substances list in the United States. There have been five national polls conducted over the trailing year, and in each and every one, an overwhelming percentage of respondents have favored the legalization of marijuana, or at the very least, the legalization of medicinal cannabis.
Nevertheless, any sort of change in the U.S. likely remains a long way off. Arguably, the biggest issue is that those few groups that tend to be skeptical of cannabis -- conservatives, strongly religious individuals, and seniors -- pretty accurately describe the current landscape in Congress. Not only do Republicans have a lot on their agenda, including an infrastructure bill and healthcare reform, but they also tend to have a poorer view of cannabis. As long as they control a majority of seats in the Senate and/or House, passing any sort of marijuana reform will be extremely difficult.
Another problem is that marijuana isn't a big enough issue to push incumbent lawmakers to act. In April, the independent Quinnipiac University asked respondents, "If you agreed with a political candidate on other issues, but not on the issue of legalizing marijuana, do you think you could still vote for that candidate or not?" Overall, 82% of respondents said they could still vote for that candidate. Ergo, Republican lawmakers have little incentive not to take a stand against cannabis.
Then there's Attorney General Jeff Sessions, who seemingly will stop at nothing to slow or halt the state-level expansion of the legal marijuana industry. Though Sessions has been unsuccessful in repealing protections for the medical marijuana industry, he was able to rescind the Cole memo earlier this year. In rescinding this memo, Sessions opened the door for state-level prosecutors to use their discretion in bringing marijuana-based charges against individuals -- even in legal states.
What ongoing inaction means for the legal weed industry
With little change expected in the U.S. weed industry, it likely means a continuation of inherent disadvantages for U.S.-based cannabis companies. For example, keeping marijuana as a Schedule I substance -- i.e., one that's entirely illegal, prone to abuse, and has no recognized medical benefits -- means that pot companies will have limited or zero access to basic banking services. Even with the federal government taking a hands-off approach, banks won't run the risk of facing monetary or criminal charges as a result of offering banking services to the weed industry.
Likewise, marijuana companies get hosed come tax time, assuming they're profitable. A more than three-decade-old tax rule known as 280E disallows businesses that sell federally illicit substances from taking normal corporate income tax deductions. This can leave pot businesses to pay an effective tax rate of 70% to 90% on their net income.
In other words, it still makes little to no sense for prospective marijuana stock investors to consider U.S.-based pot stocks. Even with all of the uncertainties that Canada offers, there's still more clarity and a better opportunity to make money by looking north than by trying to strike green gold in the U.S. market.
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