Image source: National Drug and Alcohol Research Centre.

Marijuana legalization has witnessed explosive expansion over the past decade, but November has been a pretty tumultuous month for the illicit drug thus far.

Marijuana's topsy-turvy November
Earlier this month marijuana legalization failed miserably when put to a vote in Ohio. Issue 3, which would have legalized medical and recreational marijuana in Ohio, was voted down by a nearly two to one margin. Most of the blame in Ohio likely goes to the way the bill was constructed -- it would have given 10 grow farms a veritable oligopoly within the state -- but it still represents a resounding defeat at a time when support for marijuana has surged to its highest level on record in most national polls.

However, just days after Issue 3's epic failure, presidential candidate Bernie Sanders introduced a bill into the Senate that proposes to end the federal prohibition of marijuana. It's unclear if the bill will garner any support, but it nonetheless represents an about-face from marijuana's disappointing start to the month. Sanders' bill would still leave it up to the states as to whether they'd allow marijuana to be legal, but it would remove some of the harshest barriers currently in place, such as an unfavorable tax system.

DEA head Chuck Rosenberg. Image source: Drug Enforcement Agency.

The DEA head blasts marijuana's "medicinal" value
In the latest twist, the head of the U.S. Drug Enforcement Agency, Chuck Rosenberg, made some very critical comments about marijuana to reporters last week, according to CBS News.

The federal government's hands-off approach to the drug has kept the DEA mostly on the sidelines for some time now, but that didn't stop Rosenberg from pulling a Chris Christie and "telling it like it is."

Rosenberg's comments, which paralleled the release of the DEA's 2015 National Drug Threat Assessment Summary (NDTAS), tended to focus on the apparent misconception that leaf marijuana (the type consumers smoke) has medical benefits:

"What really bothers me is the notion that marijuana is also medicinal -- because it's not. We can have an intellectually honest debate about whether we should legalize something that is bad and dangerous, but don't call it medicine -- that is a joke."

Rosenberg went on to add the following:

"There are pieces of marijuana -- extracts or constituents or component parts -- that have great promise [medicinally]. But if you talk about smoking the leaf of marijuana -- which is what people are talking about when they talk about medical marijuana -- it has never been shown to be safe or effective as medicine."

The NDTAS echoes Rosenberg's commentary by asserting that "marijuana concentrates, with potency levels far exceeding those of leaf marijuana, pose an issue of growing concern."

Rosenberg's comments highlight marijuana's biggest hurdle
National and statewide polls show that Chuck Rosenberg's comments are highly unpopular. Although national support for legalization is nearly even, an overwhelming majority of people, on a state-by-state basis, would like to see marijuana legalized or decriminalized for medicinal use.

But Rosenberg's commentary also brings to light the defining argument against legalizing, decriminalizing, or reforming marijuana laws: a lack of apples-to-apples long-term data on its safety.

Image source: GW Pharmaceuticals.

Up until recently more than nine in 10 commissioned marijuana clinical studies involved analyzing its risk profile. Only in recent years have researchers turned their attention to the possible benefits of marijuana. This means lawmakers currently have a stack of studies a mile high that suggests marijuana could be dangerous, and another handful of reports implying that it offers substantive benefits. Developing a more balanced safety profile for marijuana will be necessary to sway the minds of skeptical lawmakers who have the power to reform marijuana laws. However, it could take many years for researchers to put the puzzle pieces together to get an accurate profile of marijuana.

This isn't to say that marijuana hasn't delivered some early success in clinical trials. GW Pharmaceuticals has used cannabinoids from the cannabis plant to reduce the frequency of seizures in select cases of childhood-onset epilepsy, has witnessed positive glycemic benefits from cannabinoids in type 2 diabetics, and believes cannabinoids could be useful in treating certain types of brain cancer. But, as Rosenberg said, the marijuana leaf, not cannabinoids, is what most consumers are talking about when trumpeting legalization.

Change is likely a long way off
You may not like what Rosenberg has to say on a political level, but as an investor it should resonate with you. Rosenberg's comments serve as a warning that the push to change marijuana on a federal level is still likely a long way off. Although select individual states do allow for the legal sale of marijuana (medically or recreationally), restrictive federal tax and banking laws, which are unlikely to change, offer little solace to investors that the marijuana industry has a bright future.

The legal marijuana market is expected to bring in over $1 billion in legal sales this year, and some analysts have forecast that the market could be worth as much as $35 billion nationwide. However, this figure appears to be a pipe dream until Congress reforms its stance. Long story short, placing your money into marijuana stocks could end with your investment going up in smoke.

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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