U.S. Marijuana Crackdown Imminent?

Comments made by Attorney General Jeff Sessions at a talk earlier this week have again sparked rumors that a U.S. marijuana crackdown may be in the works.

Sessions is a notorious drug crusader who has been a long-time opponent of marijuana legalization. A recent talk at the Heritage Foundation given to the Reagan Alumni Association this week once again illustrated how the current attorney general views the green herb.

Sessions began by discussing the opioid epidemic that has gripped much of America and other parts of the western world. He went on to blame a number of factors for the increase in opioid-related addictions, including over-prescription of painkillers by doctors.




But Sessions then went on to say that he believes that drugs, including marijuana, are helping to spur on these addictions.

It’s the old “gateway drug” philosophy, of which Sessions has long been a subscriber.

A U.S. marijuana crackdown has been rumored for a long while now, ever since Sessions first assumed his position as attorney general. Now and again, his remarks cause a ruckus in the rumor mill, but so far, the federal government has yet to make any substantial moves to curb marijuana use in states that have legalized either medicinal or recreational marijuana use.

The issue at hand here, and why there’s so much ambiguity as to whether Sessions is really looking to institute a U.S. marijuana crackdown or not, lies with President Donald Trump.

While Sessions has made his position very clear on multiple occasions regarding his view of cannabis (spoiler: he’s not a fan), Trump has been far more slippery on his position regarding pot.

During the campaign, Trump said that he was fine with states sorting it out themselves but has since given contradictory statements regarding marijuana drug use, specifically legal marijuana drug use.

The endgame comes down to a difference of priority between Sessions and Trump. Obviously, Trump holds the upper hand by virtue of being the president. If he tells Sessions to back down from marijuana, there’s little the attorney general would be able to do on his own.

Alternatively, if Sessions commands the president’s ear, he might be able to sway Trump toward harsher policies on marijuana, including using law enforcement to enact federal laws that still prohibit marijuana usage, even in states where the drug is legislated and legal.

Over the last year, the Trump administration had made several moves that would indicate a harsher policy on marijuana, especially compared to the Obama administration.

The most impactful move was the rescinding of the Cole Memorandum, an Obama-era guidance that essentially said that the marijuana question would be left to the states.

Moves like doing away with the Cole Memorandum, coupled with Sessions giving talks that continuously deride marijuana as a dangerous substance like he did this week, give further credence to the idea of a U.S. marijuana crackdown.

The effect of a full-on federal pot bust in America would surely be felt on the stock market, even for Canadian marijuana stocks that have no business in the U.S.

As with any industry, a company’s stock value is based both on current operations as well as potential. If the U.S. adopts a harsher position on marijuana, that will certainly limit the near-term earning potential of weed companies, therefore hurting their stock values.

Analyst Take

Despite Sessions spouting off against the drug, there’s little evidence that a widespread U.S. marijuana crackdown is on the way.

Yes, these types of comments do not engender confidence in the market or the future of marijuana in the U.S., especially given that they’re largely based on false information. (Source: “Jeff Sessions: marijuana helped cause the opioid epidemic. The research: no.” Vox, February 8, 2018.)

But Trump has far too much on his plate at the moment to go head-to-head with the marijuana industry. Not to mention that a president who never misses an opportunity to praise business and stock market strength is unlikely to do something that would almost certainly harm both of those things.

My advice: Keep an eye on what the federal government is doing, but there’s no need for excessive concern.