The shifting winds of recreational cannabis.
I have written recently about how the US seems to be at an inflection point regarding the politics and public acceptance of cannabis. As an investor in cannabis companies, I was encouraged last week by new evidence that the acceptance of marijuana is becoming increasingly mainstream in the US.
On November 22, U.S. Representative Nancy Mace, a Republican from South Carolina, the reddest of red states, introduced a bill to decriminalize marijuana at the federal level. The States Reform Act would remove pot from the Controlled Substances Act and impose a 3% federal tax on cannabis products to pay for law enforcement, veterans mental health, and other bipartisan causes. It would also expunge the records of people convicted of federal, nonviolent cannabis-related offenses. Cannabis stocks responded as you might expect to news of the bill.
Although the South Carolina party GOP immediately condemned the measure, Republicans in nearly every corner of the country are waking up to the fact that legalizing pot at the federal level is not only consistent with libertarian and states rights principles, it’s good politics. According to a Quinnapiac poll taken last Spring, nearly 7 in 10 Americans think the use of marijuana should be made legal in the United States.
Republicans are warming up to the popularity of this issue in such numbers that some Democrats are sounding the alarm. Rep. Alexandria Ocasio-Cortez (D-NY) described efforts to legalize pot as a race between the parties. “If Republicans beat Democrats on marijuana legalization,” she said, “they’re just one or two of those kinds of social issues away from totally just eroding a ton of goodwill” democrats have with key constituencies.
This is an important issue for both parties — Republicans, in particular — due to demographics. Between 1996 and 2020, the median age of Republican voters rose from 43 to 52. The median age of Democrats increased from 45 to 49. As their demographic ages, Republicans need to find ways to remain relevant to younger voters. Cannabis can help them do that.
While Republicans are rethinking whether pot should be decriminalized and if this issue has momentum on Capitol Hill, hurdles remain. The bill to legalize recreational use of marijuana introduced by Majority Leader Chuck Schumer (D-NY) earlier this year faces opposition from key people in both parties. Among other provisions, that bill would allow marijuana companies operating in states where it is legal to gain full access to the United States banking system and claim federal tax deductions for business expenses.
But Sen. Jeanne Shaheen (D-NH) said, “We’re in the middle of an opioid epidemic, and the research that I’ve seen suggests that that is a way that more people get into drugs.” Sen. Jon Tester (D-MT) supports research into using cannabis for medicinal uses, particularly for veterans with PTSD, but has opposed legalizing it for recreational use.
But that opposition may continue to erode. Senators have changed their mind on marijuana issues in the past. And, earlier this year, Senate spoiler Joe Manchin (D-WV) said he views cannabis as a gateway drug and is unlikely to support the Schumer bill, but is “willing to learn.” So time will tell, but I have a feeling we won’t be waiting too long.
Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.