Marijuana May Be The Next Big Growth Sector In The U.S. Stock Market

By admin on January 21, 2013

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…)

We’ve all seen in the news US states such as Colorado legalizing and making marijuana smoking legal.

Public support for further legalization is building. There is also talk thatmore states could soon legalize. Since this is a new growth industry, we can only speculate in what direction it will grow. But what’s clear, plans to keep Marijuana illegal have gone up in smoke.

Marijuana History in the United States

Cannabis was made illegal in the US in 1937 with the passing of theMarihuana Tax Act of 1937. Before the 20th century, Cannabis was widely used both for industrial and recreational purpose with little social stigmas.

Pot smokers have widely referenced that our founding fathers, such asThomas Jefferson and George Washintgon were active growers and smokers, and that the constitution of the United States was originally written on hemp paper. In Virginia in the 18th century, hemp was promoted as a Tobacco alternative for farmers who worried about Tobacco’s soil depletion and less industrial use than hemp.

Some parties have argued that the aim of the Act was to reduce the size of the hemp industry^[7]^[8]^[9] largely as an effort of businessmenAndrew Mellon, Randolph Hearst, and the Du Pont family.^[7]^[9] The same parties have argued that with the invention of thedecorticator, hemp had became a very cheap substitute for thepaper pulp that was used in the newspaper industry.^[7]^[10] These parties argue that Hearst felt that this was a threat to his extensive timber holdings. Mellon, Secretary of the Treasury and the wealthiest man in America, had invested heavily in the Du Pont family’s new synthetic fiber, nylon, a fiber that was competing with hemp.^[7]

That fits the irrationality of such an act, where it was growing in popularity both socially and industrially. A long time has passed and recently, there is growing social pressure to legalize and regulate this wonderful plant.

What legalization means for businesses

So far state regulations have varied, each with different rules how to regulate Cannabis. Colorado’s is the most interesting, with components such as requiring a certain amount of the plant sold to be grown in licensed facilities in the state. This differs from California’s rule which doesn’t specify where it should be grown.

A series of new business in this niche are emerging from the cultivation and growing of the plant, the sale and distribution such as dispenseries, and niche businesses such as Cannabis restaurants.

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