It’s been a big couple of months for cannabis stocks as state-level legalization is finally starting to ramp up. In a recent victory, the MORE Act finally passed the House of Representatives, which would see the prohibition of…
cannabis being removed from the banned substances list.
Although the outlook is currently leaving a positive mark on the industry, a Senate vote could still take months before legalization efforts come into full effect. This is now the second time the MORE bill passed the house, but Majority Leader, Chuck Schumer is still pushing back on the introduction, which could pose additional threats to the overall cannabis industry in the year ahead.
Cannabis stocks, also sometimes referred to as pot stocks, are still facing a boom or bust, even as legal cannabis sales topped more than $20 billion in 2020 according to a data provided by Statista. Further projections estimate that the industry could rank in more than $40.5 billion by 2025 if legalization efforts get the green light from the federal government.
Traders and investors have posed bullish sentiments over cannabis stocks, but the year ahead could reveal a different picture.
Ongoing scrutinization, state-level regulations and jurisdictions, and controlling policies are putting the industry in a modern-day democratic chokehold.
Whether the Senate pushes forward with the introduction of the MORE Act in the following months, and if the bill finally passes on the floor; investors should consider how these stocks could light up their portfolios, perhaps not in the coming months, but for long term gains.
The Green American Dream
Looking at the financial prospects of the cannabis industry, for those products and services which are legally sold on the market, 2019 saw the industry rank at more than $13.6 billion, creating more than 340,000 jobs.
So far around 35 states, including the District of Columbia have legalized the sale of medical marijuana, and as of April 2021, some 16 of these states allow the recreational use thereof.
Sentiment over the legalization of marijuana has also been on the rise, with 68% of American adults in favor of federal-level legalization.
But legalization does not only open the floodgates for traders who are looking to jump onto hot stocks that can reap major gains, some policies and lawmakers feel that banning the prohibition thereof could also assist those who have been somewhat unlawfully or unjustly convicted of possession, use, and sale of the substance.
Whether the House can see this through, and the American Green Dream can finally become a reality is only something that time can tell.
There is however a host of new possibilities that could come from federal legalization, it’s a matter of how well traders and investors align their strategies with what market sentiment currently presents.
Jobs, Jobs, Jobs
According to a March 2022 report by the U.S. Bureau of Labor Statistics, unemployment levels were seen declining to 3.6%, as employment figures rose by 431,000 in March.
Some industries that were most severely affected by the temporary closures of facilities such as hospitality, retail trade, manufacturing, and related business services were among the sectors that acquired the most notable job gains in the same month.
While job increases are holding steady, even as the Great Resignation still holds a firm grip on American employers, the marijuana industry offers something else than well-priced stocks, and recreational products favored by millions – job creation.
An industry-related jobs report published by Leafly, in partnership with Whitney Economics reported that the marijuana industry currently holds more than 428,059 full-time employees as of January 2022, the fifth year of consecutive growth higher than 27%.
The same report mentioned that in 2021, it was estimated that the industry produced about 280 new jobs per day, and full-time positions were able to increase by 33% in a single year.
The 2022 Leafly Jobs Report found 428,059 full-time equivalent jobs supported by legal cannabis as of January 2022. Last year, the cannabis industry created an average of 280 new jobs per day.
These jobs are however spread across the industry, from agriculture, production, and manufacturing, retail and sales, legal services, consumer goods, and media relations to maintenance and construction.
Job growth has been steadily on the rise, even as some major companies are struggling to see business take shape in states where recreational use is still barred.
But there is still a lot of work that needs to go into full-scale legalization, even as a Republican-backed bill in Congress that could perhaps see the legalization of the plant for adults 21 and older is receiving minimal traction.
These low-lying efforts are holding the industry back, slowing potential job growth, and cutting veins for cross-state sales and transactions.
Are these efforts helping the industry
While many other industries have been struggling to break through inflammatory conditions and supply chain worries, cannabis has remained somewhat prevalent against all odds. Even with market demand increasing, and efforts towards legalization taking shape, manufacturers, and producers are looking for new channels through which they cultivate innovative products.
Better use of technology application through the means of AgTech could mean that producers can increase crop yields which can lead to more profitable margins. Furthermore, as competition rises, various companies look to develop tech and software capabilities that could lower operational costs, and energy consumption and produce a more reputable market influence.
But these efforts, although positive, still require time and necessary resources. Information provided by Capital Funding revealed that those entrepreneurs and…
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