Political Risk Increases For Medical Marijuana

Image Source: PEASHEALTH

Summary

• The Trump administration is likely to increase pressure on all cannabis businesses.
• GW Pharma remains the best play.
• Other cannabis companies represent poor risk/reward.

The policies of the Trump Administration pose a growing risk to all companies involved in the cannabis sphere. Attorney General Sessions is an implacable foe of all things cannabis and can make life difficult in the legal, government approval and finance areas. GW Pharmaceuticals (NASDAQ:GWPH) is furthest down the line in terms of approval and product promise. It still represents the best play for those willing to accept some risk. Recreational cannabis remains an extremely high risk area. This is both in terms of government policy and in terms of the doubtful corporate governance of the players in the market.

Government Policy

My article in May gave details at that time. Since then there have been some fresh developments. Attorney General Sessions wants to get rid of the Rohrbacher-Farr Amendment. This is despite the fact that he has always been a leading advocate of States' rights. The amendment states that federal funds can't be used to countermand laws brought in by individual states. 28 states currently have medical marijuana laws on their statute books.

In May, Sessions wrote to members of Congress urging them to overturn it:

"I believe it would be unwise for Congress to restrict the discretion of the Justice Department to fund particular prosecutions."
It is doubtful whether he will succeed in this though. Members of Congress are aware of the popularity of medical marijuana amongst their constituents, and many of them share Sessions' contradictory views on states rights.

Sessions can, however, continue to ensure that companies involved in the cannabis business do not get the usual corporate tax deductions. He can ensure they are not allowed to access banking services. He will ensure that cannabis remains a Schedule 1 drug on a par with heroin. Ridiculously, a Schedule 1 drug is one that has "no medical use". That is self-evidently untrue in the case of medical marijuana.

Story Source: The above story is based on materials provided by SEEKINGALPHA

Note: Materials may be edited for content and length

Click here to read more