When it comes to issues expected to take national attention in the 2016 elections, marijuana should be included in the debate.
Americans are passionate about marijuana
Voters have made it crystal clear that marijuana is an important issue to them, with three major national polls -- Gallup, General Social Survey, and Pew Research -- all showing that respondents have a favorable view of the drug, albeit by a slim margin. As such, voters expect all presidential candidates, regardless of party, to make their views on the drug known.
For some consumers, it's simply about the freedom to be able to use marijuana recreationally without the fear of prosecution at the federal or state level. But much higher favorability is seen from consumers when it comes to the push to legalize marijuana for medicinal purposes. Medical marijuana has been shown to have positive clinical effects on reducing epileptic seizures, improving glycemic balance for type 2 diabetes patients, and even reducing the effects of Alzheimer's disease where a dose-dependent reduction in beta-amyloid plaque was observed in six-, 24-, and 48-hour time marks.
States are all about the dollar signs. Greenwave Advisors has suggested that a nationwide legalization of marijuana could bring the industry's market value to $35 billion. It's also been estimated by NerdWallet that around $3.1 billion in taxes would be generated each year from the retail sale of marijuana. This tax revenue isn't going to close any substantial budget gaps, but it could go a long way toward pumping more money into the education system or sustaining/creating jobs.
Unfortunately, barriers to approval abound for the marijuana industry. However, a move made by Delaware, nicknamed the First State, earlier this month could be the tipping point that helps push marijuana over its seemingly insurmountable barriers.
Could Delaware be a tipping point?
On Friday, Dec. 17, Delaware officially decriminalized the possession of marijuana for adults with one ounce or less of the federally illicit drug. To be clear, this doesn't mean that marijuana has been legalized in Delaware, and legislators have made it quite clear that recreational marijuana isn't going to be a ballot initiative in 2016. The big change is that possessing the drug won't subject adults in Delaware to a fine of up to $1,150 and a jail sentence of up to six months. Instead, the penalty will be a $100 civil fine, which doesn't show up on someone's criminal record and is akin to paying a traffic ticket. Because marijuana is still illegal, law enforcement in Delaware will be able to confiscate it if someone is caught in possession of the drug, and anyone possessing more than one ounce, or underage persons, can still be charged with a crime for possession.
You might be wondering what this has to do with national marijuana legalization. The answer can be found in Delaware becoming the 20th state to now have decriminalized marijuana. Decriminalization of marijuana is often viewed as the first step to recreational legalization, and it often gives legislators a good look at how societal values, such as crime rates, are affected.
With a full 40% of states having decriminalized the possession of smaller amounts of marijuana, it could convince Congress to take a long look at potentially decriminalizing marijuana on a national level. President Obama has suggested the best way to get Congress' attention on marijuana is to keep approving the drug throughout the 50 states, and Delaware's decriminalization hits what I believe is a key number of states (20) that could at least get federal lawmakers to act.
Additionally, since decriminalization is often viewed as a step toward legalization, it suggests that in the not-so-distant future we could see the four states that have legalized recreational marijuana -- Oregon, Washington, Colorado, and Alaska -- expand to perhaps more than a dozen. The 2016 elections could see as many as a dozen states sporting recreational marijuana initiatives or amendments on their ballot.
One major hurdle left to climb
Delaware's decriminalization certainly leaves a lot to be excited about for those supportive of national legalization, but the safety profile of marijuana continues to be the one question mark that could prevent Congress from acting.
One of the bigger issues for marijuana supporters is that a majority of clinical studies for decades have examined the risks, rather than the benefits, of using marijuana. The result is that lawmakers have a mound of negative data suggesting marijuana is a dangerous drug that shouldn't be legalized, and a significantly smaller parcel of data suggestive of marijuana being a drug that may have beneficial medical properties. Unfortunately, lawmakers and supporters of marijuana can't snap their fingers and make benefits data on marijuana magically appear. The data regulators want to comb over can take years to gather, and they don't seem to be in any hurry to review this data prior to the 2016 elections.
Thus, as marijuana continues to gain traction at the state level, marijuana laws at the federal level could remain static for some time to come.
This creates quite the dilemma for investors. On one hand, marijuana is a rapidly expanding industry that has the clear support of the public. On the other, restrictive laws are preventing its nationwide legalization, as well as restricting marijuana-based businesses from gaining access to most banking services. What this does is make the marijuana industry an incredibly risky, almost wild card-like investment.
What investors have to wonder is whether the marijuana companies they've invested in, or are considering investing in, have the capital or funding capacity to survive the multiple years it could take before Congress acts (if it acts at all). With most publicly traded marijuana businesses still losing money, I'd suggest that many may not make it, which is why I've opined that your best bet is to keep your money away from this industry.
Only time will tell if I'm correct. But one thing's for sure: 2016 could be marijuana's most important year to date.