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Still a Long Road to Legalizing Cannabis Federally

But investors can still find value in U.S. cannabis stocks.

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A tie-breaking Democratic majority in the U.S. Senate won’t be enough to legalize cannabis on a national level, but we think there’s just enough support for a banking act within the next 18 months, which would make it easier for financial-services companies to lend to cannabis companies, and a states’ rights act by the end of 2023.

Nonetheless, the market has been optimistic about the potential of legalization, which has resulted in big surges for cannabis producers. Interestingly, most of the producers to benefit from this market optimism have been Canadian, which mostly wouldn’t be materially affected by changes in the United States; it’s U.S. producers that would see the most benefit from legalization.

Kristoffer Inton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.