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Image source: Flickr user James St. John.

Over the past two decades, the legal marijuana movement has gone from a dead stop to pedal to the metal.

Marijuana gains momentum, but questions linger
Two decades ago the idea of marijuana being legalized to any degree, medical or recreational, was considered taboo, and only a quarter of respondents in a Gallup study had a "favorable" view of the illicit drug.

However, a new generation with a more favorable view of the drug and a bounty of new studies coming to the forefront that suggest marijuana could be helpful in alleviating symptoms associated with some chronic and terminal illnesses have led to nearly two dozen states approving marijuana for medicinal use, and residents in four states allowing it to be sold at the retail level for adults ages 21 and up. Marijuana is also providing states with valuable tax revenue that they can use to create jobs, maintain infrastructure, and, most importantly, invest in education. Marijuana has even become a hot-button topic in the early going in both the Republican and Democratic debates.

But, as you might imagine, marijuana's proliferation has also led to more skepticism from opponents, as well as from lawmakers in Congress.

As it stands now, the federal government holds marijuana to be a schedule 1 drug. This means it's believed to have no medical benefits and is highly addictive, and is therefore illegal. The federal government has, though, allowed individual states to pass marijuana regulations and manage their own industries. But key questions regarding the long-term safety of the drug remain.

Although you'll have no shortage of longtime users willing offer their opinion regarding the long-term safety of marijuana, Congress wants to see substantial evidence of the drug's safety profile on the body and mind in clinical studies. The thing with clinical studies is that a result isn't generated overnight. Instead, it's a gigantic puzzle that's put together piece by piece over many years. Each new study is another piece of the puzzle that gives researchers and Congress a better idea of whether or not the federal government should soften its stance on marijuana from a medical or even recreational standpoint.

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Image source: Flickr user Office of Public Affairs.

Marijuana's safety profile takes a hit
One such study emerged last week from the Washington State Traffic Safety Commission -- and it didn't help the cause of optimists who want to see marijuana legalized nationwide.

As part of marijuana's recreational passage in Washington state in the November 2012 elections, the WSTSC was commissioned to find out what, if any, effect marijuana had on traffic safety within the state. According to the recently released findings, over the last five years the number of drivers (surviving and deceased) who had tetrahydrocannabinol (THC) in their systems following a fatal accident increased by 44%.

The study itself focused on THC and carboxy, a residual of marijuana that can be detected days after an individual has used marijuana. The WSTSC found that roughly 60% of fatal accident drivers (including surviving and deceased drivers) had alcohol, marijuana, or other drugs in their systems. Most of these individuals tested positive for multiple substances, with only 8% testing positive for just marijuana and 34% testing positive just for alcohol.

As the WSTSC report notes, among the 75 drivers in 2014 that tested positive for THC, around half (38) were considered to be above the legal limit of THC in the body (5 ng/ml).

However, it's also worth noting that no controls in the study could definitively determine if marijuana led to the 44% increase in detection of THC among drivers involved in fatal collisions, primarily because multiple substances were found in the bodies of tested drivers. Additionally, alcohol has long been known to cause impairment while driving, yet isn't an illegal substance, so to try and differentiate between alcohol and marijuana in any way as it relates to driving impairment and fatalities may be a bit premature at the moment. Nonetheless, researchers suggest additional data be compiled to get a more accurate profile of how marijuana (and other drugs/alcohol) could affect traffic safety.

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Image source: Oregon Department of Transportation via Flickr.

Not damning, but not good
Ultimately, this latest study on marijuana's safety isn't going to stop marijuana in its tracks, but it's yet another case of causation without definitive correlation that will almost certainly add to the skepticism and uncertainty surrounding marijuana's long-term safety profile.

You might be wondering why, if the federal government will let states regulate their own marijuana industries, we should bother worrying what 535 lawmakers in Congress think about marijuana? It all comes down to two key rules that are in need of change if the marijuana industry hopes to thrive.

To begin with, U.S. tax code 280E prevents businesses that deal in illicit substances from taking normal business deductions. Since marijuana is still illegal on a federal level, and federal tax law supersedes state tax law, marijuana businesses are stuck with an exceptionally high tax burden. Unless Congress changes this, marijuana businesses will more than likely struggle to net substantial profits, which could hamper their expansion efforts and/or their ability to hire or buy more product.

The other issue here is that banks, in general, want next to nothing to do with the marijuana industry. Of the roughly 6,700 banks in the U.S., only around 3% are actively offering banking services to marijuana-based businesses. There are simply too many rules and regulations to follow relating to the marijuana industry for banks to be actively engaged. Worse yet, if the federal government decides at some point to reinstitute federal law over each state, banks could be found liable for money laundering. It's a risk many banks would just as soon not take.

With little access to basic banking services and a brutally high tax rate, the marijuana industry is not guaranteed to survive over the long run if Congress doesn't change its stance on the drug. It's for this reason that I'd suggest that whether you're for, against, or neutral on marijuana's nationwide legalization, you should stick to the sidelines as an investor. Without a clear long-term outlook, investing in marijuana is playing with fire.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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