President Trump now supports legislation to protect the growing cannabis industry in states that have legalized the drug.
This positive federal move lifts a threat to the marijuana industry made by the anti-pot U.S. Attorney General Jeff Sessions just a few months ago.
Colorado Sen. Cory Gardner (R) said that he has received a clear pledge of support from the president in this regard.
Gardner issued a statement saying that Trump has promised a legislative solution to address the rights issue of the states once and for all regarding legalization.
White House spokeswoman Sarah Huckabee Sanders confirmed Gardner’s statement and that Trump supports states’ rights on this issue.
Cannabis legalization advocates and industry investors have welcomed this development, which they see as a clear step toward putting an end to the marijuana prohibition policy, not just in Colorado but across the country.
As soon as the news broke, marijuana stocks predictably soared.
In January, Sessions had removed the prohibitions that prevented federal prosecutors from acting against people who used marijuana despite state laws making pot legal.
Marijuana is completely legal now in eight states, while 24 states permit some form of cannabis use.
The federal government is not likely to move towards full legalization quickly, but a hands-off approach toward enforcement allows nascent cannabis firms to operate with lesser uncertainty.
This is bound to provide a boost to investor confidence in pot companies. The overall improvement in the business environment will also encourage more private marijuana firms to consider going public and increase revenue for the entire sector.
During the 2016 campaign, Trump had said that states should have the power to chart their own path on marijuana.
“I’m a states person, and it should be up to the states, absolutely,” Trump said.
Legislation protecting states where pot is legal is being drafted. It is likely to be modeled on a budget amendment of 2014 that prevented the Department of Justice from using funds to enforce federal law against cannabis users and companies.
Apart from the boost to marijuana investment, more clarity on banking rules is expected. Plus there is renewed hope for the elimination of the cumbersome 280E tax treatment, which prohibits marijuana businesses from deducting ordinary business expenses.
Analysts expect that access to capital for cannabis operators will significantly improve as a result. That could lead to a new stage of growth and expansion for pot stock investors.