Jeff Sessions’ Effort to Block Cannabis Legalization Will Backfire
President Donald Trump’s attorney general, Jeff Sessions, is determined to fight a war he can’t win. No, it’s not the war on terrorism, but it’s just as futile as fighting an abstract noun has proven to be. It’s marijuana or cannabis, if you prefer—weed, if you’re a fan of the Cheech and Chong comedy duo.
Sessions has tried to discourage—to put it mildly—cannabis investors and users alike. He wants to attack cannabis at the supply and demand level. But his methods are as antiquated as if the United States army had used the cavalry as a deterrent against Soviet atomic ICBMs during the Cold War. Whatever, and however tough, laws Sessions might try to throw against the cannabis industry, it will be too little and too late. (Source: “Why Jeff Sessions’ New War on Marijuana Hasn’t Frightened Investors or Cannabis Entrepreneurs,” Entrepreneur, January 9, 2018.)
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The big money is in the recreational market, of course; given that California is all by itself one of the top economies in the world. Having about 15% of the total U.S. population, it opens up the biggest possible market for cannabis at the state level. It will allow producers and marketers to make the kinds of business plans that can easily adapt to meet much greater demand. In turn, in California, it sets the stage for serious investment in cannabis stocks, given that a cannabis bull market is all but guaranteed.
The 1980s Called Sessions and They Want Their Drug Policy Back
One of the reasons that Sessions’ 1980s time warp “war on drugs” may be pointless is that at the very start of 2018, California legalized the use of cannabis for medical and—more crucially— recreational use in accordance with the Cole Memo, which, for intents, grants U.S. states the authority to adopt independent legislation in cannabis matters. Sessions has repealed the Cole Memo.
President Trump has not interfered, perhaps thinking that he can score more political points that way. Californians voted for Hillary Clinton in 2016 and are unlikely to sway in Trump’s favor in 2020. Meanwhile, his anti-cannabis stance can continue to bring him the support of the traditional conservative elements.
The problem, as with so many questions that have a moralistic character, often reduces to crude and boring economics. Many states have legalized medical marijuana. That means that Republicans are not as united as they appeared after they passed the Trump tax plan into law before the Christmas break.
Many Republicans—and most Democrats—believe Trump’s attorney general is violating Trump’s electoral promise not to interfere with existing Federal legal measures to normalize cannabis sales and usage. Moreover, these same Republicans understand that many states have found that the growing cannabis industry helps generate tax revenue. Given that the Trump fiscal plans have left a big hole to fill, cannabis-derived fiscal returns ultimately contribute to the very success of the tax cuts.
Sessions’ moves smell of desperation. The attorney general and Trump are losing out to common sense. Cannabis investors, therefore, should simply wait or hold, rather than sell off massively to prompt a crash. Investors are unlikely to be impressed by Sessions’ notions, which—to put it mildly—are rather passé: “Marijuana is a dangerous drug and… marijuana activity is a serious crime.” (Source: Ibid.)
Sessions’ Drug Policy Affects Republicans and Democrats Alike
It’s also unwise for Trump and Sessions to play the marijuana card politically. I have met lifelong die-hard Republicans who enjoy the regular use of cannabis. I have also met people who fight for highly “leftist” political and social causes, who have never smoked marijuana, tobacco, or any other “drug” in their life. I should know, as I belong to the latter category. In addition, many investors, at the individual or institutional level, have realized that cannabis will be a big business, whether they use it or not. They know how popular it is.
Investors who have made money buying Lockheed Martin Corporation (NYSE:LMT) stock don’t need to know how to fly an “F-35” or operate a missile system to understand that the company is going to make money in the present geopolitical context. Thus, Sessions’ moralism will hurt those most likely to appreciate such things as tax cuts and business incentives.
The most optimistic prospect for Sessions’ repeal of the Cole Memo—as far as the Trump presidency is concerned—is that it backfires. Then again, if, as some rumors suggest, Trump never wanted to be president, making drugs illegal again may prove a nifty way to lose in 2020. But that’s not all.
Sessions will no doubt be getting angry phone calls and messages from fellow Republicans, who will complain that his approach will confuse legislators in the states that have already, or are about to, legalize the recreational use of marijuana. Now, the possession and sale of recreational cannabis is only allowed in eight states—Washington, Oregon, Colorado, California, Nevada, Alaska, Maine, and Massachusetts—and Washington D.C. (Source: “A Brief History of the Drug War,” DrugPolicy, last accessed January 11, 2018.)
As it happens, Alaska voted for Trump in 2016 and Maine and Massachusetts took the cannabis plunge in 2018. People can even own marijuana legally down the street from Trump’s current residence in Washington D.C., given that the District permits possession—even if sale is not permitted.
That’s no small feat in the city where Ronald Reagan launched the biggest surge in the drug war in the past 40 years. Between 1980 and 1997, the number of people thrown in jail over non-violent drug charges rose from 50,000 in 1980 to some 400,000. (Source: Ibid.)
Trump and Sessions may want to have a little session to discuss the merits of that policy. Is that a good return on the tax dollar? Perhaps Trump may discover that legalizing cannabis may contribute to a substantial cut in tax revenues used up by incarceration. That will allow the President a bigger pool of funds to use to launch the touted infrastructure improvements, which as Trump himself admitted, America needs.
