Pete Buttigieg, the mayor of South Bend, Indiana, is one of the Democratic nominees for the 2020 US presidential election. He previously served with the US Naval Reserve. If he’s elected, Buttigieg could become the youngest president—and the first gay president—of the US.
Buttigieg’s take on cannabis legalization
As the mayor of South Bend, Buttigieg didn’t implement any legislation on cannabis. However, he signed an ordinance to prohibit businesses from selling synthetic cannabinoids. In a tweet, he stated, “Synthetic marijuana gets far less attention than opioids, but it too can be lethal. Our community continues to work proactively on the issue.”
Compared to his fellow Democratic nominees, Buttigieg hasn’t been too vocal on cannabis legalization. However, he supports the legalization of cannabis, criminal justice reform, and the removal of criminal records for cannabis-related convicts. Speaking to the Boston Globe, Buttigieg stated, “The safe, regulated, and legal sale of marijuana is an idea whose time has come for the United States, as evidenced by voters demanding legalization in states across the country.”
Buttigieg believes that black Americans across the US have been disproportionately arrested for cannabis-related offenses. To end this racial disparity, he’s supporting the legalization of marijuana.
Implications of cannabis legalization
Currently, US federal law prohibits cannabis, and the DEA has classified it as a Schedule 1 drug alongside heroin and ecstasy. Therefore, banks can’t perform cannabis-related business, and you can’t transport cannabis-infused products across state lines. Legalization would allow banks to offer services to cannabis-related businesses that require an injection of capital.
In December 2018, the US legalized hemp with the passage of the 2018 US farm bill. Since then, many cannabis companies are entering the US—the largest cannabis market. Major players Tilray (TLRY), Aurora Cannabis (ACB), and HEXO (HEXO) are focusing on expanding their hemp businesses in the country.
Performance of cannabis companies
Marred by scandals, the cannabis sector has underperformed the broader equity market this year. The ETFMG Alternative Harvest ETF (MJ) and the Horizons Marijuana Life Sciences Index ETF (HMMJ) have returned 4.2%, and 7.7%, respectively. In comparison, the S&P 500 Index is up 16.6% YTD.
Tilray, which acquired hemp food manufacturer Manitoba Harvest in the US in February, is down 57.6% so far this year. Canopy Growth (CGC) (WEED) is down 2.6%. Canopy reported lower-than-expected revenue in its most recent earnings report on August 14. Aurora Cannabis (ACB) has performed better than its peers, returning 15.0% this year. The company’s management has provided an optimistic outlook for its fourth quarter of fiscal 2019.
Netflix CEO Reed Hastings hosted a fundraiser for Buttigieg in Menlo Park, California, on July 24. Many Silicon Valley executives also support Buttigieg.
Apart from Buttigieg, many Democratic nominees are in support of cannabis legalization. Bernie Sanders, Joe Biden, and Andrew Yang want to legalize marijuana at the federal level. To learn about President Donald Trump’s view, check out President Trump: Is Marijuana Legalization a Key Weapon?