Cannabis stocks are back in the news. This, after both Kamala Harris and Donald Trump have shown their support for the legalization of cannabis.
On the surface, it makes sense that this would spark interest in the investment community. After all, isn’t that the holy grail for cannabis stocks? Legalization on a federal level?
Indeed, such a thing would be quite bullish for an industry that has long struggled with the heavy burdens of overzealous regulation and taxation. But rest assured, no matter who gets the keys to 1600 Pennsylvania Avenue, the legalization of cannabis won’t be a pressing issue. At least not pressing enough to make it a priority in the first year of either administration.
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That’s not to say you can’t make a few bucks in the cannabis game. Certainly there are a handful of cannabis stocks that could end up having a solid year in 2025. Particularly Trulieve (OTCBB: TCNNF), which is the biggest player in the Florida market. This is relevant this year as Florida voters are about to make their voices heard on Amendment 3, also known as the Marijuana Legalization Initiative. If approved, it will legalize the recreational use of cannabis for adults 21 and over.
In 2016, Florida voters approved a medical marijuana bill by a vote of 71% to 29%. It was a blowout. This time around, it may not be a “blowout.” But a bill to legalize the recreational use of cannabis still has a really good chance of passing. This despite the current governor resorting to “Reefer Madness” style propaganda in an attempt to scare voters into believing that if the Sunshine State legalizes, everyone will turn into junkies. Or some version of that.
Florida actually remains one of the most attractive states for Americans who don’t want to be taxed to death. Why the governor would be opposed to something that would actually generate additional revenue for the state is beyond me. But I digress.
The point is, if Florida voters approve Amendment 3, Trulieve should get a very nice bump. Certainly the market seems to believe voters will approve Amendment 3. Over the past month, Trulieve has climbed nearly 64%.
If Florida legalizes, I expect to see Trulieve revisit the $20 a share level in 2025.
Other cannabis stocks that have exposure in Florida include Curaleaf (OTCBB: CURLF) and Ayr Wellness (OTCBB: AYRWF).
So yes, even if Trump or Harris conveniently ignore their pledges to support legalization after a victory, there’s still opportunity here.
Of course, as I noted last month, overall, the industry does still have its problems.
Cannabis Stocks vs. Reality
To be sure, profitability is still an issue for much of the industry.
A couple months ago, Whitney Economics released a report showing that, as of August 2024, only about 27% of U.S. cannabis businesses were profitable, with about 72% identified as either just breaking even or completely unprofitable.
To put this in perspective, the U.S. Chamber of Commerce says that 65.3% of all small businesses are profitable. So the cannabis industry is well below the national average.
To be fair, the reason most of these companies are not profitable is because of overzealous taxation. Some cannabis businesses pay tax rates as high as 52.5%.
So indeed, any action on a full-scale, legitimate legalization on the federal level would make stocks like Trulieve, Curaleaf, and Ayr Wellness quite attractive. But the downside is that it’s a waiting game that will be long and drawn out.
I remain bullish on the cannabis industry, overall. But if you don’t want your cash reliant upon government action —which moves at the pace of a slug in a salt pan, consider this new bitcoin loophole strategy that’s already allowed us to score gains in excess of 6,700%.
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Indeed, I do love the cannabis market. It’s made me a lot of money over the years. But I’m not married to it. And I’m sure as hell not interested in chasing an opportunity reliant on government intervention when this bitcoin loophole strategy has already delivered quadruple-digit gains.
To a new way of life and a new generation of wealth…
Jeff Siegel
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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.
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