Medical marijuana is now legal in 33 U.S. states. Recreational marijuana is legal in 10 states. All forms of marijuana, however, remain illegal at the federal level in the U.S. But that could change.
A bipartisan group of senators and representatives in the U.S. Congress recently introduced the STATES (Strengthening the Tenth Amendment Through Entrusting States) Act. The bill would prevent the federal government from intervening in states that have legalized marijuana. It would effectively make marijuana legal at the federal level in much of the U.S.
There has been plenty of skepticism about whether the STATES Act has a shot at passage. But there's one big reason why U.S. marijuana legalization might actually happen this year: politics.
Holding the Senate
One of the sponsors of the STATES Act is Sen. Cory Gardner, R.-Colo. Sen. Gardner's home state of Colorado has a thriving marijuana industry that's expected to reach $2.5 billion by 2022, including both medical and recreational pot sales.
Gardner has been a vocal supporter of getting the federal government out of the way of states that have chosen to legalize marijuana. Last year, he even held up President Trump's judicial nominees after Jeff Sessions, then Secretary of the U.S. Department of Justice, overturned Obama administration policies about not intervening in states that had legalized marijuana. Gardner's effort ultimately led to a deal with President Trump to keep the DOJ from taking any actions against Colorado or other states that allowed legal marijuana.
The GOP maintained control of the U.S. Senate in the 2018 elections and even picked up a couple of seats. However, the map will look much different in 2020. There will be 22 Republican seats up for election compared to only 12 Democratic seats. Holding on to every current Republican seat will be very important to the GOP.
One of those seats that Republicans want to retain in next year's elections is held by -- you probably guessed it -- Sen. Cory Gardner. If Gardner can campaign on success in keeping Colorado's marijuana industry safe from federal intervention, it could mean the difference between victory and defeat.
There are three hurdles for the STATES Act in the Senate. First, the bill must be brought before the Judiciary Committee for review. Second, assuming the STATES Act clears the Judiciary Committee, it must be advanced to the full Senate for a vote. The third hurdle is actually passing the Senate. Gardner is confident that the Senate would vote in favor of the STATES Act. He stated recently to Roll Call, "If we get it on the floor of the Senate, it passes."
The bad news is that Sen. Lindsay Graham, R.-S.C., chairman of the Judiciary Committee, has stated that he isn't "very excited" about the legislation. It's possible that Graham could stop the STATES Act dead in its tracks.
However, Senate majority leader Mitch McConnell, R.-Ky., makes the decision on which bills are brought up for votes before the full Senate. He also can exert pressure on committee chairmen like Graham as to which bills are reviewed. McConnell no doubt knows that Gardner would be less vulnerable if the STATES Act is at least brought up for a vote. There's a reasonable chance that he will work behind the scenes to help Gardner.
What about the House?
The dynamics are much different in the U.S. House of Representatives. Democrats control the House by 36 seats. The STATES Act is virtually assured of sailing through committee review and is likely to win a solid majority vote in the full House.
Passage of the bill in the House also could increase the chances that it isn't blocked in the Senate. Rep. Earl Blumenauer, D.-Ore., is one of the sponsors of the House legislation. In an interview with Rolling Stone, Blumenauer said, "If this gets moving, I think you will see the Senate get on board. I think Mitch McConnell is not going to want to have his members be vulnerable."
Blumenauer is probably right. Republican senators like Cory Gardner would be especially vulnerable if the STATES Act doesn't come up for a vote in the Senate. Again, Mitch McConnell knows this.
One final hurdle
There is one final hurdle if the STATES Act passes both the House and the Senate: President Trump must sign the bill into law. However, Sen. Gardner doesn't think that will be a problem. Gardner stated to Roll Call, "The president has been very clear to me that he supports our legislation."
This is consistent with the deal made between Gardner and President Trump last year. At that time, Gardner said that President Trump committed to support "a federalism-based legislative solution to fix this states' rights issue once and for all."
Better prospects than ever
It's still possible, of course, that something could happen to derail the STATES Act. Sen. Graham could choose to dig in his heels and refuse to bring the bill before the Senate Judiciary Committee. Maybe there won't be enough votes in the Senate for passage.
Look for the share prices of marijuana stocks to serve as a gauge for the chances of passage of the STATES Act. U.S.-based marijuana stocks like Origin House (NASDAQOTH: ORHOF) would almost certainly rise as the prospects for the bill increase. So would the share prices of leading Canadian marijuana growers such as Canopy Growth (NYSE: CGC), which would be able to enter the U.S. marijuana market if the STATES Act becomes law.
One thing is for sure: The prospects for U.S. marijuana legalization appear to be better than ever. And the GOP's desire to retain control of the Senate could be what tips the scales even more toward legalization.
10 stocks we like better than Canopy Growth Corp.When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Canopy Growth Corp. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 1, 2019