President Trump Ditches Clampdown on Legal Marijuana
U.S. President Donald Trump has abandoned the Justice Department’s proposed crackdown on recreational marijuana, giving states that legalized the drug complete discretion to administer its use. The decision ends months of uncertainty over whether federal drug laws would impede on states that have already voted in favor of legalization.
Reversing the U-Turn
White House sources confirmed on Friday that the president would not be taking the advice of Attorney Jeff Sessions, who in January reversed Obama-era guidance on cannabis laws. In a one-page letter, Sessions said he would allow U.S. attorneys to enforce marijuana prohibition to the fullest extent of the law. This effectively meant that marijuana businesses in states where the substance is legal could still face federal raids and prosecution.
The decision to end the crackdown emanated from Trump himself after meeting with Republican Senator Cory Gardner, who hails from the pro-cannabis state of Colorado. Gardner was a staunch critic of the Justice Department’s policy u-turn, calling it “a trampling of Colorado’s rights.” He retaliated by blocking Justice Department nominees.
The state of Colorado has generated hundreds of millions of dollars in revenue from recreational marijuana sales. Interstate traffic, especially from New Mexico and Texas, helped to generate $1.5 billion in sales last year.
Gardner says he was assured that federal laws would not interfere with Colorado’s booming marijuana industry and that President Trump would promote a new law that gives states the authority to formulate their own policies on the matter.
Several U.S. states backed legalization during the 2016 election cycle, including California, Nevada, North Dakota, Main and Massachusetts. Recreational weed is also legal in Washington, Oregon, Alaska and Colorado.
President Trump’s decision to back state-level cannabis regulation sent marijuana stocks soaring in Friday’s session, which was characterized by widespread losses on Wall Street.
North America’s Marijuana Index, which tracks 42 leading cannabis stocks, surged 10.1% to $257.87. That was its highest settlement since Mar. 20.
The smaller U.S. index rose 14.9% to $91.76, with 16 of 19 companies reporting gains.
Meanwhile, Canada’s version of the index climbed 6.5% to $646.86.
Analysts say Trump’s renewed commitment to state rights is a game-changer for the industry, especially in California, a state with a bigger population than Canada. Greater certainty around state administration of cannabis laws could boost investment and business growth in state-legal markets.
Cannabis stocks surged to record highs in the new year before legal concerns and signs of overvaluation triggered a broad retreat in the market. However, as of Friday’s close, marijuana stocks had advanced in four straight sessions.
Featured image courtesy of Shutterstock.