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  • Writer's pictureTed Ohashi

Stocks that would benefit from cannabis legalization in the U.S.

A few weeks ago, I mentioned how important it was that there were now two fewer Sessions in the U.S. government. Of course, most people assumed the major problem was Attorney General Jeff Sessions as far as cannabis is concerned. But that was not the case. The real problem was Congressman Pete Sessions of Texas. You see Pete Sessions, let’s call him PS, was the Republican Chairman of the House Rules Committee which is acknowledged as one of the most powerful committees and is sometimes referred to as the “traffic cop of Congress.”

Here is how that comes to be. Much of the work in the U.S. government is done by committees of the House of Representatives. Committees include: Agriculture, Armed Services, Education and Labor, Energy and Commerce and Financial Services to list but a few. As a rule, the membership of committees reflects the split in the House. If a party has 55% of the seats in the House, the tradition is they will have approximately 55% of the positions in each Committee. All the Committees except the Rules Committee that is stacked with representatives of the ruling party.

Here’s why. Most Committees are responsible for a specific area of government. For example, the Armed Forces Committee deals with matters to do with the military. When a bill comes out of a Committee, it does not go straight to the floor of the House for debate. It goes to the Rules Committee that determines under what rule other bills will come to the floor of the House. It decides, for instance, whether a bill will be considered right away or not; if the ruling party wants lots of time to promote or explain a bill, the Rules Committee will allocate more time for debate and what subjects can be debated; if the ruling party wants to jam a bill through, the Rules Committee determines that very little time is allocated for discussion; it determines if a bill can be amended. The Rules Committee can even keep bills in abeyance so they are never heard. The Rules Committee is general totally partisan and the business of the government proceeds along straight party lines in almost all cases.

Enter Pete Sessions. He was elected to the House of Representatives as a Republican for eleven terms and he was the Chairman of the House Rules Committee from 2013 until he was ousted by the voters in 2019. The National Organization for the Reform of Marijuana Laws (NORML) estimates that Pete Sessions obstructed almost 40 cannabis related bills from being heard. Under Pete Sessions, providing access to cannabis for U.S. veterans suffering from post-traumatic stress disorder (PTSD) was not worth discussing. Neither was providing state-legal marijuana businesses access to bank accounts or taxation regulations like other businesses. NORML political director Justin Strekal said, “Representative Pete Sessions was the single greatest impediment in the U.S. House to the passage of common-sense, voter-supported marijuana law reform measures. His departure opens the door for the possibility of House lawmakers in 2019 enacting a number of significant, NORML-endorsed policy changes.”

This is one reason I am focussed on investing in U.S. based cannabis businesses. According to the publication ‘RollingStone,’ there are some 40 bills “…floating around the House of Representatives….along with countless others in the Senate.” These bills range from total decriminalization, to provision of banking services, to letting states decide. The closer a bill comes to legalizing cannabis in the U.S., the more certain stocks will benefit. For example, 1933 Industries (CSE: TGIF) is well positioned to benefit from the coming boom in hemp as a result of the passing of the Farm Bill recently to gaining from its branded lines of health and wellness products and expansion. Don’t forget Sunniva (CSE: SNN) that is positioned to be a leading vertically integrated cannabis company in California, a state that is larger than Canada with a tiny fraction of the competition. And don’t overlook Khiron Life Sciences (TSXV: KHRN) that is not even operating in the U.S. but is taking South and Latin America by storm and may have a shot at exporting to the European Union. These are personal favorites of mine that make up a large part of The Cannabis Report Model Portfolio that I run (click here).

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