Marijuana stocks are becoming hot items for day traders and traditional investors in the United States and throughout the world. The need for new sectors of growth in the economy has been dire for some time, since the recession really took a toll on business growth around the globe. Marijuana attitudes have been changing slowly over time, but the acceptance has been accelerated over the last decade, which makes marijuana stocks an actual thing these days.
How did we get here? How did marijuana stocks become a term that is based in reality instead of the fantastical dreams of cannabis entrepreneurs from dorm rooms in Vermont and California? Well, let’s start with how the plant became criminalized in the United States in the first place. The Marijuana Tax Act of 1937 was the first federal law aimed at demonizing and criminalizing marijuana possession. It created an excise tax on all hemp products, excepting industrial uses for the crop. Then, in 1970, the Controlled Substances Act repealed the 1937 Tax Act and instead deemed marijuana as a Schedule I drug, on par with heroin, cocaine and LSD.
That overreaction sparked the modern War on Drugs in the United States which has resulted in skyrocketing taxes to pay for law enforcement, prison services and other ancillary industries associated with the enforcement of drug laws. Marijuana got caught up in all that, despite the lack of evidence for addiction, serious health consequences of moderate use and violent behavior associated with users. Marijuana was a chill substance that could have grown into a real industry in the 20th century, but marijuana stocks were nowhere to be found in the real world during that time.
The tide began to turn in 1996, as California citizens voted to legalize the use, sale and possession of marijuana for medical purposes. The benefits of the drug for cancer patients undergoing chemotherapy and other ailments have been well documented, but it remains illegal under federal law. States have been following California’s lead over the years, beginning with medical marijuana legalization and then recreational legalization.
As more and more states have done that, marijuana companies have been popping up all over those states. Colorado and the Pacific Northwest are particular hotbeds for this type of growth of marijuana stocks, as weed entrepreneurs and big companies see the opportunity for the growth of a new sector of the economy. And other countries around the world are following in lockstep.
Take Canada, for example. The national government is set to legalize recreational use and its business are ready to capitalize. Companies like The Green Organic Dutchman, which aims to be the largest organic grower in the world, is expanding its facilities and trying to leverage that into being a low-cost grower. The potential of TGOD as a prime marijuana stock is high.
As more and more American states start to legalize the production, use and possession of marijuana, the sector will grow, Marijuana stocks will continue to be volatile, though, as long as the federal government continues to consider the drug dangerous, so federal enforcement is always lurking in the shadows. The volatility makes marijuana stocks ideal targets for day traders, but long-term investors with the right outlook could profit as well.