What happened

Nearly one year ago, in the run-up to the 2020 presidential election, then-Democratic Vice Presidential Candidate Kamala Harris promised to support legislation that "will decriminalize marijuana," and continued, "we will expunge the records of those who have been convicted of marijuana."

Nearly one year later, that promise is approaching fulfillment with the unveiling of a new bill in the U.S. Senate to legalize marijuana for recreational use. And yet, marijuana stocks are down on the news. In 2:15 p.m. EDT trading, shares of Hexo (NASDAQ:HEXO) and Canopy Growth (NASDAQ:CGC) are both down 5%, while Aurora Cannabis (NASDAQ:ACB) stock is down even more -- 7.8%.  

Why is that?

Three red arrows going down and crashing through the floor.

Image source: Getty Images.

So what

On the face of it, today's news sure sounds like good news for marijuana stocks. Fulfilling Vice President Harris' promise, the new Cannabis Administration and Opportunity Act rolled out today by Senate Majority Leader Chuck Schumer promises to "federally deschedule cannabis, expunge prior convictions" and "allow people to petition for resentencing," too, according to an analysis by MarijuanaMoment.net.

On the other hand, the bill falls short of legalizing marijuana use across the land, inasmuch as its language explicitly authorizes individual states to ban the drug if they choose to. It also threatens the attractiveness of the marijuana business by levying federal taxes on marijuana sales -- 10% at first, and rising as high as 25% over time, and presumably these taxes will be layered atop any state taxes already imposed.

That won't necessarily be great news for marijuana sales, even if the bill does become law.

Now what

And of course, this brings us to possibly the biggest objection to today's news: the fact that it's not really a "bill" being introduced for consideration by the Senate, but only a "first draft" that the Senator has released for public comment.

Over the next 60 days, says MarijuanaMoment, "advocates and stakeholders" will have the opportunity to kibbitz over the language of the bill, and potentially criticize many of the provisions that investors (initially) liked about it. Then comes the next hurdle, getting 60 senators to vote for the final version of the bill, a road that will be "rough," according to TheHill.com, but necessary if the bill is to survive any moves to filibuster it.

Indeed, as reported by TheHill.com, Senator Schumer "does not currently have the votes to pass the legislation" -- but he introduced it anyway. Whether the comments period will result in final bill language that can win sufficient support remains to be seen. For now, though, the price response we're seeing in marijuana stocks suggests that prospects for passage are dim.

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.