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From Justin Spittler, Editor, Casey Daily Dispatch:
Terra Tech plummeted 36% last Wednesday.
Terra Tech isn’t a household name. But it’s the largest publicly traded U.S. marijuana stock.
It wasn’t the only major U.S. marijuana stock that plunged last week, either.
MassRoots, a marijuana media company, fell 40%. General Cannabis, a marijuana services company, fell 40% as well.
Even Scotts Miracle-Gro got swept up in the hurricane—and it’s not even a marijuana company. It’s a fertilizer company. But many of its customers are marijuana growers.
It was a full-blown panic.
Dispatch readers aren’t used to seeing marijuana stocks falling…
That’s because the industry’s been in an explosive rally since last summer.
In fact, the U.S. Marijuana Index, which tracks 15 major U.S. marijuana stocks, has more than tripled in value since July.
So, what triggered this bloodbath?
The answer is Jeff Sessions…
Sessions is the U.S. attorney general. He’s also a notorious drug warrior.
In fact, he once called marijuana “slightly less awful” than heroin. He also believes “good people don’t smoke marijuana.”
In short, he’s no fan of marijuana.
That said, Sessions has largely left the marijuana industry alone since he was sworn into office in February.
But on Tuesday, Sessions said he will rescind the Cole Memo. This policy tells federal prosecutors to treat marijuana as a state issue.
In other words, Sessions just opened the door for a possible federal crackdown.
That’s a big concern for marijuana companies.
It’s also why marijuana stocks tanked on Wednesday…
But here’s the thing…
Sessions can’t kill the legal marijuana industry.
It’s simply too big.
The U.S. marijuana market is already a $6.5 billion industry. And it’s expected to grow to $50 billion by 2026. That would make it bigger than the American craft beer and chocolate markets combined.
What’s more, 165,000 people already work in the U.S. marijuana industry. And employment will skyrocket as the industry grows.
Marijuana sales are also a huge tax revenue generator for states where it’s legal.
Take Colorado. It legalized medicinal marijuana in 2000. It then legalized recreational marijuana in 2014.
Last year, Colorado did $1.3 billion in marijuana sales. And the state collected $200 million in tax revenues from marijuana sales.
Colorado’s not alone, either. California, Washington, and Oregon all depend heavily on marijuana sales for tax revenue.
These states would face serious budget problems if Sessions goes after the industry.
Local politicians aren’t going to let that happen…
Here’s a quote from Illinois State Senator Heather Steans:
Consumers already have easy access to marijuana and rolling back this guidance is short sighted.
Steans also said that cracking down on the industry will push more people to buy marijuana on the black market.
Steans isn’t the only concerned politician fighting back, either.
Last Thursday, Colorado Republican Senator Cory Gardner called Sessions’ decision a “complete reversal,” noting that “Sessions told me there would be no plans to reverse the Cole memorandum.”
Garden also said he will put a hold on all Justice Department nominations until Sessions reverses his stance.
In short, Sessions would face immense pressure if he goes after the industry. The backlash would be next to impossible to overcome.
Not only that, the average American favors marijuana legalization. According to a recent Gallup survey, 64% of Americans think cannabis should be totally legal. That’s an all-time high.
Investors are realizing Sessions will fail, too…
Just look at the U.S. Marijuana Index I mentioned earlier. It’s already rebounded 28% from its lows on Friday.
Many individual U.S. marijuana stocks are up even more.
Those are monster gains. But you must realize two things…
One, most U.S. marijuana stocks are still well off their all-time highs. They’re a bargain compared to where they were trading before Sessions opened his mouth.
And more importantly, as I’ve shown you over the last few months, the bull market in marijuana stocks is just getting started.
So, consider buying marijuana stocks while there’s still blood in the streets. Just remember to treat marijuana stocks as a speculation.
Don’t bet more money than you can afford to lose. Use stop losses. And take profits when you get them.
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