Cannabis legalization still isn’t guaranteed in 2020. Most of the discussions are at the state level. Democratic presidential candidates support federal legalization except for Joe Biden. Although Republicans don’t support legalization, they want more cannabis research. Cannabis has support from celebrities as well. Now Congress wants to push a few of the cannabis reform proposals for hearing.
Congress takes steps toward marijuana research and legalization
On January 10, a Marijuana Moment article said that Congress will conduct a hearing to discuss six marijuana-related reform proposals. Among the six bills, two of them are related to marijuana legalization, while the other four focus on marijuana research.
Congress held a hearing on January 15 to discuss the six proposals. During the hearing, lawmakers discussed the problems that the country faces regarding marijuana-related research. The hearing was based on evidence collected from DEA, FDA, and NIDA. Last year, the Trump administration mentioned that additional research will be necessary before any federal decision is made. However, the fact that marijuana is an illegal drug hinders the research.
The Controlled Substances Act imposed many restrictions on cannabis research. Marijuana is an illegal drug and federal laws don’t allow research on illicit drugs. As a result, the funds are limited. Also, cannabis is obtained for analysis from one authorized grower, which limits the diversity of the product available for research. Earlier, I discussed how Republicans argued the same point.
What happened at the Congress hearing?
On January 15, a Marijuana Moment article discussed what happened in the congressional hearing. Representative Joe Kennedy was formerly against reform. He explained how prohibition failed in the country and why it’s necessary. He also said that the panel leadership would be conducting a second hearing to discuss the negative impact.
Energy and Commerce Committee Chairman Frank Pallone said, “while state laws and public perception around cannabis and its derivatives have evolved over the years, much of the federal framework that regulates cannabis has stayed the same.”
Regarding the lack of cannabis that’s available for research, the DEA’s senior policy advisor, Matthew Strait, said that the issue is being investigated. Soon, there could be regulations that would license additional growers. The DEA, FDA, and NIDA all agreed that there isn’t enough marijuana for quality research. Kennedy asked NIDA Director Nora Volkow and the FDA deputy director if legalizing marijuana would help with the study. Volkow said that legalization might “have unintended negative consequences.”
Many lawmakers argued that cannabis has medical benefits. In contrast, many lawmakers who oppose legalization explained that marijuana is a gateway drug. As a result, legalizing the drug would threaten public health. For the hearing, pro-legalization group NORML submitted written testimony.
Which cannabis bills need attention?
Many other marijuana reform groups also submitted written testimonies in support of legalization and other cannabis legislations.
Six marijuana reform proposals were discussed during the hearing.
- Marijuana Opportunity Reinvestment and Expungement Act which would deschedule marijuana federally
- Marijuana Freedom and Opportunity Act which would deschedule marijuana federally
- Medical Cannabis Research Act of 2019 which would approve additional manufacturers for cannabis supply for research purposes
- Medical Marijuana Research Act of 2019 which would simplify the marijuana research process
- Legitimate Use of Medicinal Marijuana Act which would move marijuana from Schedule 1 to Schedule 2 and make it free from federal restrictions
- Veterans Medical Marijuana Safe Harbor Act, which states that military veterans can use, possess, and transport medical marijuana within states legally
How can legalization benefit cannabis companies?
The US legalized hemp in 2018 under the Farm Bill. Since then, Canadian cannabis companies have focused on expanding their hemp market in the US. Canopy Growth (NYSE:CGC)(TSE:WEED) expanded its hemp production facilities in New York and Illinois. The company also acquired AgriNextUSA in March 2019 to mark its entry in the US hemp market. Aurora Cannabis (NYSE:ACB) acquired Hempco Food and Fiber to expand its hemp and CBD business in the US. Hemp can provide many market opportunities for marijuana companies. Medical and recreational cannabis can also provide opportunities. Edibles and beverages can help cannabis companies widen their customer base and earn higher profits. As a result, full-scale legalization can benefit marijuana companies. Cannabis companies could drive revenue growth and positive EBITDA from Cannabis 2.0 in Canada. A Raymond James analyst doesn’t think that this will happen until the fourth quarter of fiscal 2020.
The analyst also discussed how more prominent cannabis companies might survive, but the smaller ones might go bankrupt amid the cash crunch in the sector. He seemed optimistic about Aphria (NYSE:APHA) and OrganiGram (NASDAQ:OGI).
As of Monday, Canopy Growth stock has risen 2.2% YTD, while Aurora Cannabis stock has fallen 12.5%. Meanwhile, Aphria has gained 7.0%, while OrganiGram has risen 6.5% YTD.