Polls continue to show that the majority of Americans, across the political spectrum, now favor some form of cannabis legalization.
Even as investors wait for meaningful rescheduling progress in Washington, D.C., we continue to see evidence of promising developments demonstrating what I call the “cultural momentum” supporting wider cannabis acceptance and legalization – which will inevitably benefit cannabis companies.
This sort of incremental progress (a roundup of which is below) is one of the main reasons it makes sense to invest in the group now.
* Nevada is pioneering what will likely be a major trend in marijuana consumption in the coming years: Cannabis lounges.
In late February the state saw its first-ever cannabis lounge open near the neon-soaked Las Vegas Strip which is lined with upscale hotels. Called “Smoke and Mirrors,” the lounge offers a variety of cannabis products, including non-alcoholic THC-infused beverages. The lounge can’t sell alcohol or nicotine products, but it can serve food. Fittingly, given the dry mouth that can result from smoking cannabis, regulators require that it must provide free water. It will also feature entertainment. Guns are prohibited. Surveillance is required.
The lounge is operated by a company called Thrive. “We’ve marked a lot of ‘firsts’ in Nevada and we’re honored to yet again be at the forefront of Nevada’s cannabis industry by officially launching the first regulated Cannabis Lounge in the state,” said Thrive CEO Mitch Britten. “With ‘Smoke and Mirrors,’ we have created an unparalleled destination for cannabis enthusiasts to enjoy a diverse range of premium products in a really engaging atmosphere.” The lounges might be popular among tourists because in Nevada it’s illegal to consume cannabis in public and in hotel rooms.
The Nevada Cannabis Control Board (CCB) has approved around twenty consumption lounge licenses. Cannabis lounges are the “next frontier” for the industry, says Tyler Klimas, the CCB executive director until late 2023.
The lounges got the greenlight under a cannabis reform law approved by Gov. Joe Lombardo (R) last year. This isn’t the first cannabis lounge in the state. Back in 2019, a cannabis lounge now called the SkyHigh Lounge was opened on sovereign tribal land, which doesn’t come under CCB jurisdiction. Recreational cannabis use was approved by Nevada voters in 2016.
* The New Hampshire House of Representatives in late February approved a bill to legalize recreational-use marijuana. The House has approved cannabis legalization several times, but it has always failed in the Senate. There’s some reason to think this time might be different. That’s because last year, Gov. Chris Sununu (R) reversed his long-standing opposition to recreational-use legalization. He now supports it.
Sununu changed his mind in part because of polls that show a majority of Granite Staters favor legalizing cannabis sales. “Knowing that a majority of our residents support legalization, it is reasonable to assume change is inevitable,” Sununu said last year when he reversed course. “To ignore this reality would be shortsighted and harmful. I stand ready to sign a legalization bill that puts the State of New Hampshire in the driver’s seat, focusing on harm reduction, not profits.” New Hampshire is the only New England state that has not yet legalized recreational use.
* House of Representatives and Senate panels in Virginia have approved a compromise bill to legalize retail cannabis sales. The next step would be for the full chambers to pass the legislation and send it to Gov. Glenn Youngkin (R). Both chambers are controlled by Democrats, so full approval is likely. However, Youngkin seems reluctant to sign the legislation into law. The bills would delay retail store openings until May 2025 at the earliest. Use and possession of cannabis are legal in Virginia, but sales are banned.
* Arkansas’ attorney general has approved the language in a November ballot initiative that would expand the state’s medical marijuana program, and clear a path towards legalization of recreational use. Now it’s up to cannabis advocates to collect about 91,000 supporting signatures by July 5. The referendum is called the Arkansas Medical Marijuana Amendment of 2024. It would allow more health care professionals to prescribe cannabis, expand the number of conditions cannabis can be used to treat, and accept medical patients from other states. It would also legalize recreational use if the federal government removes marijuana from the controlled substance list.
* A New poll suggests that 70% of Nebraskans want the state to legalize medical marijuana. The poll was conducted for Neilan Strategy Group. The results are in line with a 2022 poll which found 80% of registered voters favor medical-use legalization. That poll was done by Nebraskans for Medical Marijuana which is collecting signatures to put medical cannabis legalization to voters in a referendum this year. The group collected enough signatures in 2020. But its referendum was rejected by the Nebraska Supreme Court. It found the proposed referendum asked voters to consider more than one issue, which violates state rules. They’re now giving it another try.
* The South Carolina Senate approved a bill that would legalize medical use of cannabis. The bill, called the Compassionate Care Act, now goes to the state’s House of Representatives. Gov. Henry McMaster (R) has indicated he may approve medical use legalization. A 2023 poll found that 76% of South Carolinians support medical use legalization and 56% approve of recreational-use legalization. U.S. Rep. Nancy Mace (R-SC) has been an outspoken proponent of cannabis law reform. South Carolina would become the 39th state in the nation to legalize cannabis for medicinal use.
* Missourians bought more than $1.4 billion worth of cannabis in the government-sanctioned market during the state’s first year of legalized recreational-use sales. Not surprisingly, most of that, or $1.13 billion, was recreational-use cannabis as opposed to medical use. The state began legal recreational-use sales in February 2023. It launched medical-use sales in October 2020. Since then, Missourians have spent more than $2 billion on cannabis products in the legal market.
* Germany’s national parliament, the Bundestag, has approved a bill to legalize cannabis. The bill, approved by a 407-226 vote, will also legalize home cultivation and allow “social clubs” to distribute marijuana to members. Germany is “fundamentally changing our cannabis control policy in order to combat the black market,” said Health Minister Karl Lauterbach.
The bill now goes to the Bundesrat, which represents German states. It can’t block the reform. But it could stall implementation, for example by sending it to a committee to mull criminal justice angles which it might do. A recent YouGov poll found that 47% of Germans back legalization and 43% oppose it, while 11% are undecided.
* Ukraine’s President Zelensky has signed a bill legalizing medical cannabis. Regulators are setting up import rules. Sales could start this year.
If you’d like to know which stocks are the best to own to benefit from the steamroller of cultural momentum supporting cannabis legalization, consider subscribing to Cabot Cannabis Investor here.
