Could the movement to legalize medical marijuana get a boost in the coming year?
If you want to know when the country’s anti-pot laws are likely to go up in smoke, keep an eye on the stock market because predicting the fate of the country’s growing cannabis industry could hinge on what’s happening on Wall Street.
How so? Researchers at the Socionomics Institute, which studies social mood and its influence over social attitudes and actions, long ago made an interesting observation: When the country’s social mood is positive, the prohibitionist view on marijuana tends to reign supreme. But when the mood darkens, society as a whole is more chill and tolerant of the drug.
“During times of negative mood, society’s priorities shift,” says Chuck Thompson, a researcher with the Socionomics Institute. “People have other, bigger worries and begin to view recreational drugs as less dangerous, even innocuous.”
Over the past century, Thompson says, governmental actions have reflected those changing attitudes about marijuana. During periods of positive mood, policymakers have stepped up regulation of cannabis. When mood has turned negative, they have become more 420 friendly.
The stock market proves to be a good indicator of the nation’s social mood, which means it also can double as an indicator of attitudes about medical marijuana. Thompson points to a few moments in the history of high times to illustrate that point:
- In 1937, when the Dow Jones Industrial Average was soaring, Congress passed the Marijuana Tax Act, which banned casual consumption of the drug, limiting its use to medical and industrial purposes. Even greater crackdowns happened during the period of positive mood from 1942 to 1966. And in 1989, after seven years of net rise in the stock market, President George H.W. Bush gave his famous “War on Drugs” speech.
- In contrast, between 1937 and 1942 the nation’s mood soured. During the final year of that period, Thompson says, Congress launched its “Hemp for Victory” campaign to encourage farmers to grow the crop for industrial purposes related to the war effort during World War II. In 1977, at a time when social mood had been trending negatively for years as evidenced by a bear market in PPI-adjusted terms, President Jimmy Carter recommended that Congress legalize possession of small quantities of marijuana.
- In November 2008, in the midst of the biggest bear market since the Great Depression, Massachusetts voters passed an initiative that decriminalized the possession of small amounts of marijuana, and Michigan voters passed a law loosening restrictions on medical marijuana. Only seven months later, Oregon passed a bill in favor of licensing hemp farming, and the “Green Rush” began to kick into high gear. Pot proponents expanded their infrastructure in a move that continues to pay dividends today.
At this point, 33 states and counting have legalized medical marijuana; 10 and counting have legalized its recreational use. Many of the industry’s biggest victories occurred in 2018, as stocks swung wildly. Yet federal legalization, the ultimate prize for marijuana advocates, has remained elusive. “We expect the scales to shift even more in favor of medical marijuana legalization as mood becomes more negative during the next major bear market,” Thompson says.
Even now, marijuana and peripheral industries offer opportunities and risks to U.S. speculators and ganjapreneurs. Dispensaries, growing equipment providers, and farming and manufacturing are among the industries profiting from changing state laws. “When negative social mood finally does bring the drug war to an end,” Thompson says, “marijuana will play an increasing role as a tax-generating industry in the United States and elsewhere.”
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