Below is a chart and brief excerpt from today's Early Look written by Consumables analyst Howard Penney.

We just passed the 50th anniversary of the CSA, and there are now 15 states with recreational Marijuana programs, and another 22 states have Medical programs.  I'm not asking what your belief is on those factors listed above, or should the CSA be changed because it will be changed; the question is when and how can you profit from it!

My conservative estimate is that the ten largest U.S. Cannabis companies in the U.S. will generate $5.5 billion in revenues in 2021, up from $3.3 billion in 2020.  Because of the CSA, this multi-billion dollar industry effectively operates in prohibition, with the obvious comparison to the alcohol prohibition in the 1920s. Prohibition made it federally illegal to produce, import, transport, and sell alcoholic beverages, but consumers were safe from prosecution. 

Today, the cannabis industry does not have access to federal banks, which results in a significantly higher cost (capital & expenses) than it should be for an industry as big as it is. 

The recent election suggests that we are at a point of no return on prohibition of marijuana. It's just a matter of time before a real change in Washington occurs. Consumers have long changed their attitude toward legalization, passing the 50% mark in 2014, and now it stands at better than 66%.  Therefore, this past election cycle's most significant shift was more about the substantial increase in Federal lobbying by the cannabis industry. 

In 2019, federal lobbying expenses totaled nearly $11 million, up 206% from the 2018 level and just under 1% of the ten largest company revenues.  I don't have the final 2020 numbers, but if we hold that math to 2021, Federal lobbying spending by the cannabis industry could be upwards of $30-40 million in 2021, with at least a similar amount in 2022.  This suggests that by the mid-terms, the cannabis industry will have spent close to $60-80 million lobbying to have marijuana removed as a schedule one drug from the CSA.  Can that level of spending change a few Republican votes in the Senate?  Time will tell!

CHART OF THE DAY: Past The Point Of No Return For Prohibition  - Picture2