Could Trump spoil the ‘pot stock frenzy’?

Thursday, 8 February 2018
Melbourne, Australia
By Bernd Struben

  • ‘No accepted medical use’
  • Enter ‘The Donald’
  • 12 chances to potentially double your money…

It’s no secret that many ‘pot stocks’ have seen investors pocket massive gains.

Stocks like Hydroponics Company Ltd [ASX:THC], for example.

The company is involved in developing medicinal marijuana. It also manufactures and sells the specialised hydroponic equipment needed to grow the crops.

On 27 October 2017, THC shares were trading for 22 cents. At time of writing, the stock is trading for 74 cents. That’s a gain of 236% in less than four months.

Then there’s Medlab Clinical Ltd [ASX:MDC]. The share price is up 357% since 5 February 2016.

MDC is also in the medicinal marijuana field. It’s developing a range of cannabis-based pain management medicines. That’s a good area to target.

Grand View Research expects the treatment of migraines, arthritis and chronic pain to help drive the global medicinal marijuana industry to US$55.8 billion by 2025.

Of course, not all pot stocks take off like that. Plenty of them fail. And even those that succeed see a lot of ups and downs along the way.

No one is aware of these risks more than small-cap specialist Sam Volkering. It’s why he painstakingly analyses every facet of a company’s business and market potential before even adding it to his watchlist.

There’s still no guarantee that when he finally pulls the trigger and recommends one of the stocks he’s been following that it will shoot the lights out. Small-caps are inherently risky. Which is why you should never invest more than you’re prepared to lose.

But Sam’s track record at Australian Small-Cap Investigator speaks for itself. And, as you may know, he’s been atop the pot stock story since its early days.

Even after this week’s market fall, the medicinal marijuana stock he recommended to his readers last February is still up 485%.

And now he’s actively recommending two ASX-listed pot stocks he believes could deliver similar, if not better, returns for 2018. You can find all the details in Sam’s new special report, ‘2018’s Pot Stock Frenzy’, here.

He calls it a frenzy because the momentum just keeps building. The pent-up demand for medicinal — and recreational — cannabis is massive. And a pending government decision on exporting Australian medicinal cannabis could further fuel the frenzy.

But could Donald Trump spoil the party?

More, after the markets.

Markets

Overnight, the Dow Jones Industrial Average closed down 19.42 points, or 0.08%.

The S&P 500 lost 13.48 points, or 0.50%.

In Europe, the Euro Stoxx 50 index finished up 59.60 points, or 1.76%. Meanwhile, the FTSE 100 rose 1.93%, and Germany’s DAX gained 197.77 points, or 1.60%.

In Asian markets, Japan’s Nikkei 225 is up 111.59 points, or 0.52%. China’s CSI 300 is down 1.14%.

In Australia, the S&P/ASX 200 is up 9.19 points, or 0.16%.

On the commodities markets, West Texas Intermediate crude oil is US$61.69 per barrel. Brent crude is US$65.51 per barrel.

Gold is trading for US$1,315.33 (AU$1,682.65) per troy ounce. Silver is US$16.36 (AU$20.93) per troy ounce.

One bitcoin is worth US$7,744.95.

The Aussie dollar is worth 78.17 US cents.

‘No accepted medical use’

The global war on marijuana began in the US. And now, by virtue of its superpower status, the US is leading the way to end that war…one state at a time.

But on a federal level marijuana remains illegal. As it has been since the 1930s.

Marijuana’s legal status was last updated under President Nixon. Under the Controlled Substances Act of 1970, marijuana was categorised as a Schedule I drug. Meaning the feds maintain that cannabis has a high potential for abuse and — get this — ‘no accepted medical use’.

As more states began legalising medicinal marijuana under the previous administration, Barack Obama declared that he had more important concerns to attend to. This resulted in the Cole memo, issued by former Deputy Attorney General James Cole in 2013.

The memo recommends that federal prosecutors look the other way when it came to all matters weed.

Additionally, according to FindLaw:

Since 2014, Congress has approved a budget amendment that prohibits the Department of Justice to use funds to prevent state from implementing their medical marijuana laws. Known as the Rohrabacher-Farr or CJS amendment, this piece of legislation must be acted on each year to keep it in place so its future is uncertain.’

Obama, in my humble opinion, took a step in the right direction. Unfortunately, he didn’t want to expend the political capital to actually amend the Controlled Substances Act.

When push came to shove, he took the easy way out.

On exiting the White House, Obama left the budding cannabis industry in the world’s largest economy hanging in legal limbo.

Enter ‘The Donald’

Last month, on 4 January, Trump essentially tossed out the Cole memo.

From Reuters:

The U.S. Justice Department… rescinded an Obama administration policy that had eased enforcement of federal marijuana laws in states that legalized the drug, instead giving federal prosecutors wide latitude to pursue criminal charges.

The action by Attorney General Jeff Sessions could have damaging consequences for the burgeoning marijuana industry in the six states including California and Colorado that have legalized the drug for recreational use, plus dozens of others that permit medicinal use.

Justice Department officials declined to say whether they might take legal action against those states, saying further steps were “still under consideration.”

‘…White House spokeswoman Sarah Sanders said President Donald Trump’s top priority was enforcing federal law “whether it’s marijuana or immigration.”

‘…The administration’s action drew condemnation from marijuana legalization advocates and politicians in both parties in states where the drug has been legalized.’

So, will Trump spell the end of the booming billion-dollar marijuana market in the US?

In short…it’s highly unlikely.

First, like Obama, Trump has a lot of other things to focus on that will take priority.

Second, states’ rights are a hot button issue with his core supporters. And they don’t like to see the feds trampling around on their home turf.

Third, re-read that last line in the Reuters quote above. Democrats and Republicans both condemned the move to reignite federal involvement in state-sanctioned marijuana industries.

Now that the legalisation movement has gained this much momentum — and money — it has many vested bipartisan interests backing it.

All that’s not to say Trump and his lackey, Sessions, won’t rock the boat some more. Trump seems to enjoy doing that. And we’ve seen how a few words from him can see entire stock indices climb or fall by multiple percentage points.

It’s one more risk to consider. One almost sure to add to the already volatile nature of these small-cap pot stocks.

But if you have the stomach to ride out some potentially wild price swings, Sam Volkering is convinced he’s found two ASX-listed pot stocks that are set to be the next to see their share price rocket. You can find out more here.

And if you’ve invested in pot stocks, we’d love to hear from you…whether you tripled your money or lost your shirt. We’d also like to hear whether you believe Australia should follow the lead of progressive US states and legalise recreational marijuana.

To share your thoughts and experiences, send us an email at letters@portphillipinsider.com.au. If we publish your letter, we’ll only use your first name.

12 chances to potentially double your money…

When someone offers you 12 chances to potentially double your money, you might think you’re at a casino.

But this offer isn’t being made by Crown Casino. It’s being made by our publisher, Kris Sayce, and quant trading legend Jason McIntosh.

And I don’t use the term ‘legend’ lightly. Last financial year Jason tipped 16 of the 20 best performing stocks on the ASX 300 to his subscribers at Quant Trader. And he’s confident he can do that again…and again.

So confident, in fact, that he’s backing his offer of 12 — or more — chances to double your money over the next 12 months with a unique pledge.

Find out just what’s on offer by clicking here.

Finally, check out the story below…

In today’s Australian Tribune: ‘Sex in the Office May Be Banned for Aussie Politicians

Australian politics would play well as a Seinfeld episode.

In one episode, for example, George Costanza, played by Jason Alexander, is fired for having had sex with the cleaning woman on his office desk.

When called in by his boss, George replies, “Was that wrong? Should I not have done that?” Despite pleading ignorance to the rules, he’s fired.

And the same fate could await Aussie politicians if the government follows in the footsteps of the US Congress. But there is opposition brewing to any such move.

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd