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The Impact of Donald Trump’s Victory in the 47th U.S. Presidential Election on the Cannabis Industry

John Carter

Written by: John Carter

Updated on November 7, 2024

The Impact of Donald Trump’s Victory in the 47th U.S. Presidential Election on the Cannabis Industry

In the Wednesday U.S. presidential election, Donald Trump successfully secured the 47th presidency, a result set to influence numerous policy areas significantly, with the cannabis industry at the forefront. Cannabis legalization has become a highly sensitive issue in the United States, gaining substantial traction at the state level. However, federal policies and regulations remain ambiguous, especially within the Republican-led context. This article will analyze how Trump’s election could impact the future development of the American cannabis industry, as well as the challenges and opportunities the industry may face with a Republican-controlled Congress.

Historical Background of Trump’s Cannabis Policy

Looking back at Trump’s first term, his stance on cannabis was relatively conservative but also exhibited a degree of “liberal contradiction.” Although he supported states deciding on legalization, he never took concrete steps to advance federal reform. During his presidency, his former Attorney General Jeff Sessions notably rescinded the Obama-era cannabis enforcement guidelines that encouraged prosecutorial discretion, a move that caused a small “earthquake” within the cannabis industry.

However, Trump has not consistently opposed cannabis. He has repeatedly emphasized “state rights”—allowing states to make their own decisions about legalization—while maintaining an overall “hands-off” approach. Interestingly, Trump has expressed a more open attitude toward medical marijuana, citing its potential health benefits and voicing support for more research on its medical uses. In the 1990s, Trump even advocated for the legalization of all drugs, including cannabis, arguing that legalizing drugs was the only way to curb drug abuse effectively by stripping profits from drug cartels. However, he rarely revisited this stance during his presidency.

Trump’s Recent Stance and Statements on Cannabis Legalization

Throughout this election campaign, Trump’s comments once again demonstrated his “contradictory” approach to cannabis. On one hand, he publicly supported the recreational cannabis legalization initiative in Florida, even stating, “As a Floridian, I will be voting yes on Amendment 3 this November,” in a post made to his social media platform, Truth Social, on Sept. 9. This stance implies that Trump may continue to support state autonomy on cannabis legalization. On the other hand, he also employed strong anti-drug rhetoric during his campaign, even suggesting capital punishment for drug traffickers. This contradictory stance leaves uncertainty as to whether he will support broader federal reform in his second term.

After the recreational cannabis proposal in Florida failed, Trump continued to advocate for reduced penalties for minor cannabis possession and stressed that states should implement appropriate laws to protect public safety. Although his rhetoric indicates a cautiously open attitude towards cannabis, he has also made it clear that he opposes public cannabis consumption. This reflects his policy tendency towards moderation, likely focusing on maintaining public order and supporting medical marijuana research.

Moreover, Trump mentioned his intention to reclassify cannabis as a “Schedule III” drug, which would significantly lower its regulatory restrictions. The Controlled Substances Act currently lists cannabis as a “Schedule I” drug, alongside hallucinogens, meaning it is seen as having no recognized medical value and a high potential for abuse. Rescheduling would reclassify cannabis as a low-dependency drug, opening new pathways for medical marijuana research and potentially benefitting companies specializing in medical cannabis.

The Republican-Controlled Congress and Its Impact on Cannabis Reform

Despite Trump’s personal willingness to support some cannabis reforms, one of his biggest challenges may stem from the Republican Party’s own stance. The GOP has traditionally held a conservative position on cannabis reform, with many members opposing full legalization and expressing caution towards the legalization of both medical and recreational use. With the Republican majority in Congress, cannabis reform bills face greater obstacles, especially those involving comprehensive legalization or national-level banking service reform. Although Trump may be open to moderate cannabis policies, he will need to align with conservative forces within the party, requiring carefully crafted strategies and directions.

However, it’s worth noting that Trump has indicated he would work with Congress to pass “common-sense” legislation, including provisions allowing cannabis businesses authorized by state laws to access banking services. This statement could be a positive signal for the financial system’s formal support of the cannabis industry. While the GOP’s overall stance remains unclear, Trump’s complex relationship with the party makes the trajectory of federal cannabis policy uncertain.

Immediate Impacts on the Cannabis Industry and Stock Market

Trump’s victory has already had direct economic impacts on the cannabis industry. With recreational cannabis legalization proposals failing in states like Florida, coupled with Republican control of the Senate and the presidency, market sentiment surrounding the industry has been pessimistic. Following the election results, several stocks in the U.S. cannabis operator index fell sharply, with companies like Ayr Wellness and Trulieve Cannabis Corp. seeing declines exceeding 30%. This reaction reflects not only uncertainty around Trump’s policies but also investor doubt about the cannabis industry’s future growth.

Florida Amendment 3 Result of the Ballot on Legalizing Recreational Marijuana.

The failed proposal in Florida also contributed to negative sentiment as investors worried that legalization progress in the state may be further delayed. Additionally, with Republicans holding the Senate, comprehensive federal legalization becomes less likely, especially in areas involving interstate commerce and banking services, thus compounding uncertainty for investors. In this environment, investor confidence has been shaken, and they may delay or reduce investments in the cannabis industry, affecting its overall growth trajectory.

Bottom of Line

Trump’s election has undoubtedly introduced new uncertainties to the cannabis industry, especially with a Republican-controlled Congress posing additional obstacles to comprehensive cannabis reform. However, Trump’s characteristic “flexibility” may offer a glimmer of hope for the industry. Despite his support for state-level legalization and the medical use of cannabis, his anti-drug rhetoric and pressure from conservative members of Congress may temper his stance toward further support of the cannabis sector.

Looking forward, Trump may adopt a moderate approach, supporting state self-regulation while promoting medical cannabis research and cannabis businesses’ access to banking services. However, achieving national cannabis legalization or full banking integration for the industry will require more bipartisan consensus and innovative policies.

In summary, Trump’s presidency could bring modest policy relaxation, particularly in the medical cannabis and banking services sectors, but achieving comprehensive federal reform in the short term remains unlikely. For the cannabis industry, the next four years may be marked by volatility. The challenge for industry stakeholders and investors alike will be to find sustainable growth pathways amid an uncertain regulatory environment.

John Carter
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