Why Jeff Sessions’ latest move concerning marijuana legalisation could be good for the cannabis industry

Earlier this month, US Attorney General Jeff Sessions said he would rescind the Cole Memo, the Obama administration’s policy on marijuana. It caused a bit of panic and introduced uncertainty in the flourishing cannabis industry in the United States. Nevertheless, once the dust has settled, advocates see Sessions’ policy shift as a blessing in disguise for marijuana legalisation.

Sessions’ move to accelerate marijuana legalisation

Possession and use of marijuana for medicinal or recreational purposes have been legal in some form in several states in North America. However, cannabis remains illegal at the federal level. In 2013’s Cole memo, the Obama administration told the federal prosecutors that in enforcing drug laws, they should use their discretion not to focus on businesses operating in the regulated system in states where marijuana has been legalised. Instead, they should focus on illicit enterprises, such as those that sell drugs to children or operate in criminal gangs, according to The Washington Post.

That is what Sessions was trying to change. Now, federal prosecutors can go after cannabis dispensaries or pursue marijuana cases based on their discretion, regardless of whether they are operating in a state where marijuana has been legalised. However, Sessions did not actually declare that there would be a crackdown on cannabis businesses, so his announcement does not seem to have a major change in the policy.

If anything, Sessions’ cancellation of the Cole memo would accelerate the legalisation of marijuana in other states and at the federal level. According to The Guardian, immediately after Sessions’ announcement, a bipartisan group of legislators already started working on a legislature that would change the classification of marijuana as illegal at the federal level, consequently overruling Sessions. Politically, a backlash to the Trump administration could help more Democrats to be elected to the office and push them to provide a clearer support for cannabis legalisation.

National legalisation would be a major victory for cannabis companies

Cannabis legalisation at the federal level would be a significant win for companies operating in the robust legal cannabis and hemp industry. The ArcView Group projects the cannabis industry to rake in US$40 billion (AU$50 billion) in sales in 2021. Hemp-derived CBD market is the fastest growing segment of this industry, and it is projected to grow at a CAGR of 53 percent in the next two years.

One of the companies that would benefit in the legalisation of cannabis would be PotNetwork Holding, Inc. (OTCMKTS: POTN). PotNetwork Holding offers a range of hemp-derived CBD brands, and while hemp-derived CBD products are legal in all states, they are often confused to be illegal by authorities and consumers.

Hemp is a strain of cannabis. It is rich in cannabidiol (CBD) and has virtually no tetrahydrocannabinol (THC). CBD and THC are the two main chemical compounds found in the cannabis plant. Both provide therapeutic benefits, but CBD does not have a psychoactive effect, meaning users don’t get high. CBD is a legal alternative to marijuana, in which users can experience the therapeutic benefits without breaking any law.

PotNetwork Holding’s wholly-owned subsidiary, Diamond CBD, has several products such as gummies, vape liquids, drops, oil, and pet foods available in 10,000 retail stores across the US. They are designed to make consumers feel more relaxed, and most users take them to maintain their overall health.

Last year, PotNetwork Holding saw its best year so far, with strong sales generated throughout 2017. Preliminary results showed that the company’s sales for the year amounted to $14.5 million, compared to US$1.6 million (AU$2 million) for the entire 2016. Given its impressive growth, equity research firm SeeThruEquity has increased its price target for PotNetwork Holding’s stock to $1.25 (AU$1.56) from the previous US$0.40 (AU$0.50), which it has already exceeded.

“We see POTN as a speculative growth company focused on the burgeoning legal cannabis and hemp market targeting the fastest growing sub segment (hemp derived CBD). Upcoming catalysts new product launches, aggressive marketing initiatives and entry into new markets (specifically China), and efforts to uplist shares to a national market,” said SeeThruEquity.

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