As recently as a decade ago, marijuana was considered to be a taboo topic. Politicians skirted the issue if ever questioned, and Americans mostly avoided the discussion of what was largely an illicit drug throughout the United States.
But a lot has changed in a decade. Today, two-thirds of the country have given the green light to medical marijuana, and Illinois recently became the 11th state to OK adult-use marijuana. Recreational sales will commence in the Land of Lincoln on Jan. 1, 2020. We've also witnessed a number of politicians openly discuss, and perhaps even support, marijuana reform at the federal level.
So, if so much has changed, at least among the public and at the state level, why hasn't the government shifted its stance on marijuana at the federal level? A recent poll from CBS News reveals the key insight that's holding the industry back.
Support for legalization hits an all-time high in this annual survey
In April, just ahead of 4/20 (April 20), a celebrated day among the cannabis community, CBS News released its now-annual survey that outlines how the public perceives marijuana. When asking if respondents favored the idea of legal marijuana use, an all-time record 65% were in support, which is up 6 percentage points from April 2018, and 20 percentage points from April 2013. This result more or less jibes with national pollster Gallup's results, which showed 66% support for legalization in its October 2018 survey.
Among the findings, CBS News found that, for the first time ever in its polling, a majority of Republicans supported legalization (56%). However, as has been the case for some time now, seniors aged 65 and up were still on the fence about legalization, with just 49% in support of such an idea. Comparatively, 72% of young adults aged 18 to 34 were in favor of legalization, along with 72% of self-identified Democrats.
One of the primary reasons marijuana has been growing in popularity is that most Americans view it as a positive for the local economy. Just over half of those people polled (52%) suggested that cannabis could be an economic positive, compared to just 15% who viewed it as a negative for the local economy. The remainder of those polled foresaw little or no economic effect.
Furthermore, exactly half of all people polled felt that legalizing marijuana use would have "not much effect" on the number of violent crimes committed. Comparatively, 20% expected a decrease, while 26% forecast an increase in violent crimes with increased cannabis use.
Marijuana isn't viewed as a political game changer
Each and every one of these data points would appear to be a selling point for federal reform. Americans overwhelmingly favor legalization, believe it's helping their local economies, and don't think cannabis use will lead to more violent crimes. And yet, it remains an illicit substance at the federal level.
The reason? According to the CBS News poll, 56% of Americans questioned said their presidential candidate's support for legal marijuana wouldn't make a difference in their vote. Meanwhile, 21% suggested they're more likely to vote for a candidate who supports legalizing weed, with an equal 21% less likely to vote for a candidate who supports legalizing pot. Put in another context, a majority of the public may have an opinion on whether they believe cannabis should be legal or not, but the stance their candidate takes won't be enough to sway their vote.
A 2018 survey from the independent Quinnipiac University yielded a very similar finding. Quinnipiac posed the following question to its 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?"
A mere 13% of respondents affirmed that they wouldn't vote for such a candidate, with a whopping 82% noting that they still would. Marijuana simply doesn't have enough political clout on Capitol Hill to cause elected officials to lose their seats. This means there's little rush for lawmakers to endorse the legalization movement, even if the public tide has dramatically shifted in favor of legalization in recent years.
Cannabis could remain illegal at the federal level for years to come
Even if voters won't be making marijuana a single-voter issue, it doesn't reduce the importance of the 2020 elections. On top of numerous states expected to vote on recreational cannabis, the federal government could see shake-ups at the congressional and presidential level. With Republicans having a historically more adverse view of cannabis than Democrats, hanging onto the Senate and/or Oval Office could doom pot to at least another two years without any chance of federal reform. In short, a lot is riding on next year's elections.
Although there are plenty of ways for marijuana investors to make bank in the U.S. via the hemp and cannabidiol markets, a lack of progress on the federal cannabis front could certainly dent investors' near-term expectations.
For example, last quarter we witnessed multistate cannabis operator Acreage Holdings (OTC:ACRGF) fall by 20%, making it one of the 25 worst-performing cannabis stocks. Acreage, which has retail stores, grow farms, and processing sites in more states (20) than any other vertically integrated U.S.-focused pot stock, agreed to be acquired by Canopy Growth (NYSE:CGC), the largest marijuana stock in the world by market cap, in April.
The $3.4 billion cash-and-stock deal was made on a contingent-rights basis, with Canopy Growth paying $300 million in cash up front, and handing over $3.1 billion in stock later, upon the legalization of marijuana at the federal level in the United States. Although the deal has a roughly 90-month runway to occur, Republican wins in the Senate or Oval Office next year could possibly push back any chance of reform for another 24 months, at minimum. Canopy Growth might look to have an easy in to the United States' burgeoning pot market, but there's no guarantee that the contingent rights of the deal with Acreage will be met anytime soon, if ever.
Until marijuana becomes more of a single-voter issue, there's little chance of real federal reform in the United States.