‘Clearly this is what the voters want,’ expert says

ETFMG Cannabis Research and Banking Expert Jason Wilson sits down with Yahoo Finance Live to talk about lawmakers legalizing marijuana through the MORE Act, federal taxation on cannabis companies, and the outlook on cannabis stocks.

Video Transcript


DAVE BRIGGS: Welcome back. The marijuana momentum in this country was well, short-lived to say the least. The MORE Act did pass the US House late last week, which would legalize cannabis at the federal level but it is sure to die in the Senate as it always does. The question is, can cannabis continue to thrive in this environment?

Let’s talk about it with part of our “ETF Report” brought to you by Invesco QQQ, with cannabis research and banking expert, Jason Wilson. Jason represents the only ETF focused on the global cannabis industry. Good to see you, Jason. So let’s talk about first that actual legislation that got through the House, it will die in the Senate. In terms of the merits of it, is that what this country needs, is that what businesses need?

JASON WILSON: Yeah. I mean, I think the people have spoken. If you look at the recent polls, we see over 68% support for full recreational use, legalization at the federal level. And speaking to medicinal, it’s over 91%. So you know, clearly this is what the country, the voters want. The lawmakers are the ones that are really kind of jamming it up.

And from beyond just the desires of the voting public, you have to look at the positive effects it would have. From the economy, with respect to creating more taxes, more jobs, the public safety. And just the medicinal value that comes out of it.

So clearly, the voting public has spoken. And the lawmakers are actually, they’re starting to take some steps to work it out. But I agree with you, the MORE Act is not going to make it through but is definitely a step in the right direction.

DAVE BRIGGS: Sure, the public wants it, agree with that. But is that piece of legislation what business owners are looking for? I know part of that raised taxes from 5% to 8% on cannabis. It actually got less Republican support than the prior iteration. And some who actually support legalized cannabis in this country didn’t even vote for it.

JASON WILSON: Yeah. I think what’s been proposed between the MORE Act and the Cannabis Administration Opportunity Act is overreaching, particularly on the tax side. And you know, I think also with respect to some of the social equity and criminal justice reforms, what Nancy Mace has proposed is much more pragmatic and I think has a much better chance of actually making it through. Where it’s just simply de-scheduling, and leaving it up to the states to manage it. It creates a small, I believe it’s a 3% federal tax to fund certain programs but for the most part, it’s going to allow the states to regulate cannabis basically the same regime that we see with respect to alcohol. And that’s probably more what we need, more what the industry needs, more what the states want. And probably more in line with what the businesses want as well.

DAVE BRIGGS: Yeah. It seems the Democrats are solely focused on the social equity component of that, which they cannot seem to gain any Republican support, zero in fact, in the Senate as of right now. Safe banking is the one thing I hear constantly from business owners that they needed. It’s passed the House six times now. How important is that for cannabis companies across this country?

JASON WILSON: It’s incredibly important. And I mean, that is– the States Reform Act will solve for that, obviously, but that as standalone legislation would be a huge boon to everyone working in the industry. I mean, the fact that the vast majority of transactions are still done in cash, it puts anyone working in the industry at risk. And you know, when you look at the drag on corporate balance sheets, anyone in the business where you can’t deduct a significant portion of your expenses under 280E, I mean, it just makes it really hard, you’re fighting against yourself all the time.

And I understand where the Democrats are coming from with respect to not wanting just that one piece to go through without more substantive reform. But as an interim measure, we see how no progress at all is dragging on returns and is keeping everyone out of the market. It’s hurting every business, large or small, minority or otherwise.

DAVE BRIGGS: Let’s talk about those returns, Trulieve down 25% year to date, Canopy 19%, Curaleaf 22%. Tilray is the winner down 4.7% year to date. Is this a good time to invest in cannabis stocks? Any of them stand out and why?

JASON WILSON: Yeah. I mean, it’s hard not to be optimistic. You know, 2021 was– sales fell off a little bit but I mean, you still have to look at global sales going from $21 billion to $29 billion, almost $30 billion. You know, it’s looking forward to next year we’re probably going to see another big bump up to $35 billion, $36 billion globally. So the macro trends are there. When you look at valuations on these companies, they’re trading like old, stale industries, not emerging companies with all this opportunity.

And we’re starting to see movement as well on the Hill. I mean, just recently, we’ve had both the Senate and the House actually pass medical research bills. So you know, we’re going to start seeing more push in this direction. We’re seeing countries like Germany, Italy, Greece, and we’re seeing movement in the UK, you know, Mexico obviously. There is a global movement. There’s a few catalysts that need to come into place but these stocks by any metric are not trading at high valuations. And there’s a lot of room to the upside.

DAVE BRIGGS: New York, New Jersey, Connecticut, all coming online sometime over the next year or two. Jason Wilson from ETFMG, the one ETF focused on the cannabis space, the stock symbol MJ. Good to see you, Jason. Thank you.

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