When American voters chose the Democrat Party to lead the White House and both chambers of Congress in last year’s presidential election, cannabis advocates figured the legal marijuana industry would reap the benefits. The majority of left-leaning politicians in the U.S. support declassifying marijuana from the DEA’s list of Schedule 1 banned substances, after all, and polls suggest up to 92 percent of Americans favor legalizing the plant.
But alas, the industry has made minimal progress during the first year of Joe Biden’s presidency, despite repeated pledges from Congressional leaders that reform is on the horizon.
Beyond just frustrating the activists and preventing millions of people from accessing cannabis as medicine, the government’s inaction is being felt in financial markets.
Stock prices of companies in the cannabis space have lost nearly half of their collective value over the past eight months, per AdvisorShares Pure U.S. Cannabis ETF, a popular measure of the sector’s market performance. During that same period, the Dow Jones Industrial Average has climbed 20 percent, the Nasdaq about 18 percent and the broader S&P 500 almost 20 percent.
Only a small number of stocks in the cannabis space have found their way to major U.S. listings. Because of its banned federal status, most cannabis companies still list on over-the-counter exchanges or in Canada.
The most recent setback came over the weekend when New York-based investment bank JPMorgan Chase announced it would halt some cannabis trades from its brokerage clients. Earlier this year, Credit Suisse Group made a similar decision.
The setback of the past eight months contrasts significantly with the industry’s extreme optimism after Democrats dominated last year’s elections. As investors flocked to the industry, cannabis companies raised billions in capital.
But elected officials haven’t passed any significant marijuana legislation since then. And there’s nothing on the horizon that would suggest progress anytime soon. The problem? Not enough Democrats are on board. Their biggest hurdle is likely in the White House, as President Joe Biden has spent most of his nearly five-decade career in politics fighting against the plant.
Despite the industry’s recent struggles, experts say cannabis is still in good shape. Sales revenue across the country’s medicinal and recreational states combined to reach $20 billion in 2020 and forecasts have the industry doubling to $40 billion by 2025 as more states begin adult-use sales.
Hope for legalization is not lost, by any means. It’s just taking much longer than the majority of polled Americans seem to want.