States and investors want to earn money from marijuana

It is estimated that by 2027 the cannabis industry will be worth it $ 57 billion. Most countries still ban the supply of cannabis for recreational use, but many have legalized the plant for medical use in recent years. Germany they are to legalize their sale and taxation soon, which will feed their state budget by EUR 1 billion a year. Although marijuana cannot be legally bought over the counter in Poland, you can buy stocks of companies operating on this market.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

Marijuana in Germany soon legal?

Since Russia's invasion of Ukraine, the topic of cannabis legalization has disappeared from public discourse. However, it may come back soon thanks to the cannabis legalization process in Germany. Medical cannabis, prescribed by doctors, has been available in Poland since 2017, however, recreational use of marijuana is prohibited. At the same time, the cultivation of fiber hemp is developing in Poland - it differs from hemp with a much lower concentration of THC, the main psychoactive substance.

Preparations for the legalization of marijuana are ongoing in Germany. The implementation of this demand is part of the coalition agreement between the SPD, the Greens and the FDP, which is the basis for the actions of the government of Olaf Scholz. Legalization is a priority for the government, but work on it has been slowed down due to the pandemic and the war in Ukraine. German Finance Minister and FDP Chairman Christian Lindner tweeted on 6 May that legalization would come "soon". It therefore seems that the Bundestag will pass the relevant law within a few months. The assumptions of the project assume that each adult will be able to possess and buy marijuana at licensed points. The sale is also to be taxed. According to the FDP's pre-election announcements, the taxation of marijuana, in a manner analogous to that of cigarettes, should generate approximately EUR 1 billion in additional budget revenues annually.

READ: Marijuana - How to Invest in the Cannabis Industry? [Guide]

USA still without legalization at the federal level

The process of legalizing marijuana is also progressing in North America. Recreational marijuana is currently available in 18 US states and Canada (see diagram). Most other states have access to medical marijuana. Still, recreational marijuana has not been legalized at the federal level throughout the United States. It seemed that such legalization would take place soon after President Joe Biden was inaugurated (in January 2021). And the Democrats will rush to implement it, fearing the loss of the Senate majority (50 senators plus Kamala Harris's final vote) after the 2022 elections. However, this did not happen and the case remains open.

Source: Gallup, Wikipedia, eToro calculations. * At least for medical purposes

It is the lack of progress in legalizing marijuana at the federal level that is driving the fall in the share prices of companies operating in the cannabis industry. Their prices were rising before Biden's inauguration, on the wave of expectations related to his presidency. But then they started to decline. The North American Marijuana Index, an index of North American cannabis-related companies, has fallen 12 percent in the past 60,5 months. It seems, however, that there is no alternative to legalization. And when its clearer prospects appear at the federal level, company valuations may increase significantly.