So far, 33 US states have legalized marijuana for medical use. Also, 11 states allow the use of marijuana for recreational purposes. However, the US federal government still classifies marijuana as a Schedule 1 drug.
Marijuana legalization has become a hot topic as the 2020 presidential election nears. Many Democratic presidential nominees support legalizing cannabis. However, President Trump has been silent on the subject. Last year, his administration legalized hemp, a type of cannabis with a smaller amount of its psychoactive ingredient, THC, and a greater amount of the more therapeutic ingredient CBD.
Congress to vote on marijuana legalization
Amid this backdrop, The Hill reported yesterday that on November 20, the House Judiciary Committee would mark up the legislation that federally decriminalizes marijuana and addresses disparities in law enforcement. The article added that the committee would provide additional details on the bill today.
Committee chairman Jerrold Nadler issued a statement, noting, “Our marijuana laws disproportionately harm individuals and communities of color, leading to convictions that damage job prospects, access to housing, and the ability to vote.”
Nadler continued, “Recognizing this, many states have legalized marijuana. It’s now time for us to remove the criminal prohibitions against marijuana at the federal level. That’s why I introduced the MORE Act, legislation which would assist communities disproportionately impacted by the enforcement of these laws.”
Details of the bill
Apart from the decriminalization of marijuana, the bill proposes a 5% sales tax on cannabis products at the federal level, according to The Hill. The bill advocates utilizing the tax revenue on developmental programs for the communities that are most affected by the war on drugs. Also, the bill supports expunging previous marijuana-related convictions, allowing convicts to apply for resentencing.
Weakness in the marijuana sector
This year has been tough for the marijuana sector. Lower-than-expected earnings, vaping-related deaths, and expectations of a slowdown in cannabis sales seem to have dragged the sector down. The ETFMG Alternative Harvest ETF (MJ) has fallen by 35.6% year-to-date through November 18. The S&P Index rose 24.5% during the same period.
Year-to-date, prominent cannabis players Aurora Cannabis (ACB) and Canopy Growth (CGC) (WEED) have fallen 55.8% and 48.7%, respectively. However, we expect that the federal legalization of cannabis could boost the sector.
For more on this sector, please read How Do Cannabis ETFs Look in November? and Aurora Cannabis’s Q1 Reflects Industry Doom and Gloom. For more on cannabis-related news, please check 420 Investor Daily.