This Is What the 'Green Wave' Looks Like

The House votes to decriminalize marijuana... The Senate probably won't yet... States want the money... 'A classic example of change coming to Washington'... This is what the 'green wave' looks like... How to profit from the boom... Don't miss Greg Diamond's latest call...

On Friday, the U.S. House of Representatives held a landmark vote...

No, it wasn't about stimulus. Not directly, at least...

The Democrat-controlled House voted 228 to 164 in favor of the Marijuana Opportunity Reinvestment and Expungement ("MORE") Act, which would decriminalize marijuana at the federal level.

Why do all of these bills need fancy acronyms? CARES, HEROES, MORE... I guess it's the Washington equivalent of Congressional marketing – something needs to grab their attention.

More important than the name are the details in the proposed bill...

As it's written, the MORE Act would remove marijuana from the list of "Schedule 1" drugs in the Controlled Substances Act. This list also includes heroin, ecstasy, LSD, and other drugs that are deemed addictive and of no legitimate medical use.

This "de-scheduling" – in cannabis (marijuana) industry-speak – would eliminate criminal penalties for growing, distributing, or possessing weed and its "derivatives," and allow the expungement of previous convictions for federal marijuana-related offenses.

And practically speaking, a law like this would make it easier for the cannabis industry to do business... That's because even in states where marijuana is now legal, companies currently end up doing all of their business in cash.

As of today, the banking system won't recognize these businesses as long as the federal government says it's illegal. In short, with the MORE Act, the government could take a huge metaphorical pair of scissors to the "red tape" the roughly $60 billion cannabis industry faces.

That's what legalization does.

But before anyone goes outside to celebrate with a smoke...

Or alternatively, wring your hands at your local or state representatives, just know that the MORE Act probably isn't advancing past the House, at least not anytime soon...

The legislation doesn't have enough support in the Republican-controlled Senate at the moment. As Stansberry NewsWire analyst Nick Koziol reported on Friday...

If Democrats win both Georgia Senate run-offs, the bill will have a better chance at passing the Senate. If not, the bill is a "non-starter," according to our colleague and Cannabis Capitalist editor Thomas Carroll.

But either way, the mere introduction of this act in Congress is significant... This is the first time that the decriminalization of marijuana legislation has been voted on in the House.

Whatever your personal opinions about cannabis, when it comes to investing, this is a watershed moment... It's an incremental change that could lead to long-term benefits for anyone paying close attention.

This is precisely what we want to reiterate today. As Thomas said roughly two months ago, in the Masters Series on October 10...

I would say we are within months, not years, of some type of meaningful federal legislation.

We're nearing the point where the feds are catching up to – or finally recognizing – what 'we the people' want...

As we wrote in the November 4 Digest, the day after Election Day, 15 states and Washington, D.C. have now legalized cannabis for adult recreational use. And 34 have legalized it for medicinal purposes.

These updated numbers include five states – Arizona, Mississippi, Montana, New Jersey, and South Dakota – that legalized cannabis in one form or another just last month.

As we also wrote that day, these results didn't surprise us for one big reason... money.

Thomas pointed to this same reason back in October, when he explained that "money, money, and money" is the top reason he's so confident that meaningful federal legislation about cannabis will be passed sooner than most people think.

The reported benefits of cannabis for medical use have been growing for decades... One of my older family members was prescribed it in pill form about two decades ago while doing chemotherapy treatments.

And if it were up to progressive scientists and those who see benefits from the drug, cannabis would probably be legal across the U.S. right now...

But state ballot measures aren't being put up for votes for purely medical reasons...

They're being linked directly to tax revenue, which states are in desperate need of given the expenses they've agreed to.

As Thomas wrote on October 10, the cannabis industry can provide new, recurring sources of revenue. And it isn't chump change, either...

In 2019, $1.9 billion of tax revenue came to states with recreational cannabis laws. This excludes states with only medical-cannabis programs. We are highlighting just the recreational states as they illustrate how readily available the tax revenues are.

Colorado alone has raked in more than $1.3 billion in revenues from medical and recreational cannabis since 2014.

This is the same reason sports betting is being declared legal in more than half of the country... why casinos are popping up everywhere outside of Las Vegas... and why states and counties are installing speed-camera boxes on the sides of roads, too. More from Tom...

As of early July, every single U.S. state will be short of funds in 2020. This threatens important services such as education and health care. It's estimated that states will see a $200 billion shortfall.

The federal government is no different... The Bipartisan Policy Center tracks the federal deficit on a monthly basis. The chart below illustrates the deficit's monthly progression for 2017 to 2020 (estimated). This information comes directly from the U.S. Department of the Treasury and the Congressional Budget Office ("CBO"). The chart speaks for itself...

The CBO is projecting a 2020 deficit of $3.3 trillion. This is the federal government. The source of the increase is obvious – the COVID-19 pandemic has catalyzed massive stimulus spending.

As we know, the Fed can print money, but states still have to balance their budgets. They cannot harvest dollars from a money tree, and most are facing big trouble in 2020 and 2021.

This is all to say that the cannabis industry has one of the largest macroeconomic tailwinds going for it today – government debt.

We like 'betting on things that never change'...

Government spending and debt is one of these things... unless an alien species wants to one-up central banks' "helicopter money" and drop $17 trillion or so from space to wipe out all the negative-yielding debt worldwide today.

Don't get us wrong... Legal marijuana has growing support for other reasons, too.

We're talking about things like those medical benefits... to job creation for people now working at big cannabis companies like Trulieve Cannabis (TCNNF) or local dispensaries.

One of my neighbors manages a dispensary here in Maryland. Of the proposed legislation in Congress, he told me over the weekend, "That's good for my business."

More from Thomas, who has been a health care sector analyst for two decades...

Leafly is a well-regarded cannabis news source. According to its annual 2019 Cannabis Jobs Report, legal cannabis supports more than 240,000 jobs. This is roughly the equivalent of all the clergy in the country.

More importantly, legal cannabis is quietly expected to be the fastest-growing occupation in the U.S. over the coming years... by an eye-opening margin.

According to the Bureau of Labor Statistics, legal cannabis jobs are expected to grow 250% between 2018 and 2028.

And as with tax revenues, the biggest boon for employment will come from further expanding the legal market to cannibalize the illicit market.

In fact, a report from New Frontier Data estimated that federal legalization would create 782,000 jobs immediately.

And the effects are durable, as the report also estimates that the figure would grow to 1.1 million by 2025 – less than five years from now.

Thomas says legalization will undoubtedly support job growth... And this is important because that should be "mouthwatering" to politicians facing reelection in the years ahead.

A real question to ask today is, 'Why wouldn't politicians support the legalization of cannabis?'...

According to surveys, roughly two-thirds of U.S. citizens are now OK with legalizing cannabis. And this is something that enough people on both sides of the major political fault lines can agree on. According to Thomas in the October 11 Masters Series essay...

Eight out of 10 Democratic voters support cannabis legalization. More importantly, 55% of Republican voters also support the effort. Only one group, those over 75 years old, continues to disagree with legalization.

It's up to Congress now. There are two major pieces of legislation up for debate over the next year or so, if you ask us.

One is the MORE Act, which we've discussed today... We'll likely see plenty of debate about the details moving ahead (namely, we think the suggestion of a particular chunk of federal tax revenue that is suggested to go to areas "adversely impacted by the War on Drugs" will be discussed).

The other big legislation up for debate is the Secure and Fair Enforcement ("SAFE") Banking Act (see, another catchy acronym). The SAFE Banking Act passed in the House in 2019, but it has also yet to be voted on in the Senate.

This act would loosen federal restrictions on banks so they can offer legal cannabis companies all the financial services they provide to other legitimate businesses. Right now, since marijuana remains a Schedule 1 drug, this can't happen.

The MORE Act, as we said, could take care of this issue through the decriminalization route, too.

In any case, we sense that meaningful cannabis legislation is closer to passing through the Senate than many folks realize. For one, a growing number of Republican senators – like South Dakota's pair of Mike Rounds and John Thune – now represent states whose populations have legalized marijuana.

In fact, there are 34 co-sponsors of the SAFE bill to loosen restrictions on cannabis businesses that's in the Senate – including a handful of Republicans. That's still fewer than the 51 votes needed to pass a bill, but Thomas believes there might be more support than even those numbers indicate. As he wrote on October 11...

We recently attended a webinar hosted by Arcview Market Research, a multifaceted company supporting cannabis research and investment. The topic was federal legalization, and guests included Sen. Cory Gardner and Rep. Earl Blumenauer. Joining the congressmen were other professionals from the industry.

A prominent theme was "the votes are there" in the Senate. The source of this view is the 34 co-sponsors of the cannabis supportive bills in the Senate.

While no one in politics will make a prediction about anything (that's what we are for), it is my view that the webinar participants feel strongly that the Senate could get something done immediately.

This is incredibly encouraging and supports our view that something meaningful will happen in the Senate this year or certainly early next year.

So what's next?

Steven Hawkins of the Marijuana Policy Project reform organization joined Thomas and our colleague Jessica Stone in a recent video interview to talk about everything going on in the cannabis industry today. If you're interested, it's worth a watch. As Hawkins said...

This is a classic example of change coming to Washington. The number of states that are legalizing cannabis makes the current status quo untenable. There's going to be some relief with banking, and I expect to see that in the next Congress...

And we will see other changes that might fall short of "de-scheduling," but I do think there will be a push behind de-scheduling. We could see five more states in this next legislative session legalize cannabis for adult use and right behind those states are probably four or five ballot initiatives in 2022.

For instance, since New Jersey voted in favor of legalizing cannabis, Hawkins said that it will likely cause politicians in New York and Connecticut to consider it. After all, people can just take a bridge or tunnel across the Hudson River from New York to get their products in New Jersey if they want to.

While that could result in a lot of toll-road revenue, New York would also be missing out on billions of dollars from cannabis taxes. One study estimates as much as $1 billion annually in tax revenue for Connecticut alone over the next five years. According to Hawkins...

It behooves everyone to be thinking about the day that cannabis is fully legalized.

That's what we're doing... We don't precisely know when the Senate will get on board, but we're willing to bet it's not an "if" anymore. From there, the "floodgates" will open...

This is what the 'green wave' looks like...

And when it comes to your portfolio, here's what you need to know... The best cannabis companies are poised to profit in a big way.

We've laid out the case for more money sloshing around the cannabis industry in the years ahead... and we believe it's a strong case. But like anything, there will be winners and losers along the way...

This is where Thomas and his Cannabis Capitalist newsletter come in to play.

Not only does Thomas provide unmatched independent research, context, and expert knowledge about this growing industry, he also recommends how individual investors can best profit in the industry.

Whether you smoke or not, if you're looking to hitch a ride on the "green wave"... we urge you to check out Cannabis Capitalist.

Before joining Stansberry Research in early 2019, Thomas worked for nearly two decades at big Wall Street firms like Legg Mason and Stifel Financial. Fortune magazine once ranked him as the No. 1 health care analyst in the U.S.

He follows the health care industry closer than anyone we know... and recommends a model portfolio of thoroughly researched cannabis-related stocks in his newsletter.

These companies are better-positioned than their competition, and their share prices spike when any type of announcement is made about a bill or law to set the federal legalization process in motion.

In other words, now is the time to get involved in the space if you're not already. If you're interested in learning more and getting a subscription to Cannabis Capitalist, click here.

And if you simply want to hear more from Thomas about everything going on in the industry today, be sure to check out his recent interview with our colleague Dan Ferris on the Stansberry Investment Hour podcast... or watch Thomas' video interview with Steven and Jessica below.

Finally, before we wrap up today, a quick reminder...

Ten Stock Trader editor and technical analysis expert Greg Diamond wrote to you over the weekend in our Masters Series about his brand of trading. These are two must-read essays if you missed them... Here is Part I and here is Part II.

In these essays, Greg describes how he gravitated toward technical analysis early in his investing career and why he decided to leave Wall Street to join Stansberry Research.

That story is worth the read alone. But when you're finished, be sure to click here to check out Greg's latest prediction about why Wednesday, December 23, will mark a critical date for the stock market.

Greg is using the same signal that told him something big would be happening in March of this year. (And as we know now... it did.) If you've followed along the Digest this year, you know we're big fans of Greg's work, so we urge you to listen to what he's saying now.

The Path Forward for Pot Stocks

Steven Hawkins of the Marijuana Policy Project sits down with our colleague Jessica Stone and Cannabis Capitalist editor Thomas Carroll for an exclusive interview. He provides insight into what the Election Day wins mean for the cannabis industry, what the path forward looks like in the U.S. regulatory picture, and how investors could profit...

Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and don't forget to follow us on Facebook, Instagram, LinkedIn, and Twitter.

New 52-week highs (as of 12/4/20): AbbVie (ABBV), Analog Devices (ADI), Altius Minerals (ALS.TO), ARK Fintech Innovation Fund (ARKF), ProShares Ultra Nasdaq Biotechnology Fund (BIB), BlackLine (BL), Siren Nasdaq NexGen Economy Fund (BLCN), Morgan Stanley China A Share Fund (CAF), CBRE Group (CBRE), Richemont (CFRUY), Cognex (CGNX), Cresco Labs (CRLBF), Crispr Therapeutics (CRSP), Curaleaf (CURLF), Disney (DIS), ProShares Ultra MSCI Emerging Markets Fund (EET), Eagle Materials (EXP), FedEx (FDX), Gravity (GRVY), Green Thumb Industries (GTBIF), Intuit (INTU), Renaissance IPO Fund (IPO), Jushi (JUSHF), KraneShares Bosera MSCI China A Fund (KBA), MSA Safety (MSA), Match Group (MTCH), Cloudflare (NET), Intellia Therapeutics (NTLA), OptimizeRx (OPRX), Palo Alto Networks (PANW), Flutter Entertainment (PDYPY), Qualcomm (QCOM), Construction Partners (ROAD), Starbucks (SBUX), Southern Copper (SCCO), Sea Limited (SE), Silvergate Capital (SI), First Trust Cloud Computing Fund (SKYY), ProShares Ultra S&P 500 Fund (SSO), Seagate Technology (STX), Constellation Brands (STZ), Trulieve Cannabis (TCNNF), The Trade Desk (TTD), ProShares Ultra Semiconductors Fund (USD), Vanguard S&P 500 Fund (VOO), Zebra Technologies (ZBRA), Zendesk (ZEN), and Zymeworks (ZYME).

Our mailbag is overflowing with feedback on Dan Ferris' latest Friday Digest. We'll share more e-mails throughout the week. We also received a note for Ten Stock Trader editor Greg Diamond over the weekend. Do you have a comment or question? As always, send them to feedback@stansberryresearch.com.

"Dan, I rarely write to comment on the contents of the Digest, but today I had to.

"Thank you for so clearly articulating what I have thought for a long time, that the whole package of equity, diversity and political correctness is nothing more than a new form of racial and gender discrimination. (Yes, I'm an old, white male – the only demographic against which discrimination is presently acceptable.)

"I expect you'll get a lot of negative feedback and I wanted to give you at least one very, very positive bit of feedback." – Paid-up subscriber Charles M.

"One of, if not – the – best column since I've been reading them (About 4 years). Americans had better wake the hell up – no relation to 'woke,' I assure you – before we end up with such a labyrinth of conflicting laws we're totally helpless. We're slowly – or maybe not so slowly – being Gulliver'd to economic death. Many kudos, sir; keep up the great work." – Paid-up subscriber Doug S.

"Thank you, Mr. Ferris for your forthright Digests in recent months. I always used to look forward to Porter's Friday Digests because of his forthright writings. He has passed the torch onto an excellent writer.

"Whether it has been about the lockdowns or 12/4's topic regarding NASDAQ's idiotic decision, I find myself agreeing with your opinions and ideas. I too am very libertarian (small letter L intentional as the Party tends to embarrass itself). Live and let live. Love your neighbor as yourself. And if change is what you seek, BE that change. BE the example of what you wish the world to be. Just don't force your notions of right and wrong on anyone and everyone else.

"The thing that mandated affirmative action causes that nobody wants to talk about is the fact that it makes so many non-racist folks angry because they are said to be, by their very whiteness or maleness, racist and/or sexist. Reverse discrimination (and let's not paint it as anything but) will cause additional resentment where it need not exist. And this resentment only widens the chasm between the social justice warriors and those who are labeled as the racists/sexists.

"If this is not stopped soon, I believe it will be the cause of serious consequences in the not-too-distant future. It won't have a direct economic consequence, though the economic consequences will be severe. The politicians and social justice warriors in the media (include the entertainment crowd) love sounding morally superior to the rest of us, and at some point, enough will be enough." – Paid-up subscriber Jeffrey H.

"I completely agree with everything Dan spelled out in his 12-4 column! Anytime he feels like 'ranting,' I'll be reading!" – Paid-up subscriber Tim T.

"I don't want people on the board of corporations that I invest in due to their sex or skin color. I want people on the board that are the best at their JOB. I agree with you wholeheartedly. When one of these stupid proposals come up as a proposal at a board meeting I vote against it." – Paid-up subscriber Micky C.

"I totally (1,000%) agree with:

Merit should be the only yardstick for appointing directors, the same as it should be for hiring anyone, in any job, anywhere.

"If the social groups want more representation on corporate boards they should survey the corporate board of directors, ask them what qualities and experience they are looking for in a director and then put programs in place to help their social group gain those qualities and experience." – Paid-up subscriber Jeff H.

"Loved your Digest on Friday Dan. Bravo to you for speaking out. I've heard the term 'silent majority' used in a number of different areas and I believe it is applicable here. I believe the majority of people agree with you that the 'woke' crowd is pushing things too far in the wrong direction. This will only stop when the majority stops being silent and begins speaking out and pushing back.

"Identity politics via critical race theory seeks to divide us into different 'tribes' thereby creating friction and conflict. I would go as far to say it is a mental disorder that is spreading more rapidly than the COVID virus and we best speak up now while it's still allowed as our first amendment rights are washed away. Keep being you Dan and God bless." – Paid-up subscriber Robert N.

"Greg, you are among my favorites. I have been trading options for about five years and it has been my choice. I am so glad to have another technical trader at Stansberry." – Stansberry Alliance member Jeff S.

All the best,

Corey McLaughlin
Baltimore, Maryland
December 7, 2020