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2018 Midterm Election Results

Updated: Mar 13, 2019

What to Expect from Here

When people wake up on November 7th, 2018, there will have been significant movement on the cannabis front due to tonight's election results. We wanted to get you some hot takes and highlight things to watch as politics and elections are one of the biggest driving forces behind the march of cannabis legalization, which has a profound effect on both public and private companies and asset values. There will be a lot of ink spilled on the election over the next week as people ramp up for MJ Biz so we will try and point out a few obvious and some non-obvious results to factor into your individual investment decisions.


Assuming Democrats have taken the House and Republicans strongly retain the Senate, there is one overriding theme for this election. The States Act or some descheduling has never been better positioned. We know the bill will finally make it out its committee conference (see number 2 below) and would seem to be one of the few areas President Trump can work with his new House of Reps in a bipartisan way in an area that he has already admitted he isn't ideologically disposed on. Trump hates losing and he will be looking for opportunities to co-opt Democrats and we could see him getting behind a bill that has strong bipartisan support, if it gets that far.


Here is a top 10 list of what we are paying attention to tomorrow and beyond:


1. Michigan is now our 10th adult-use state. With nearly 10MM people there, it was the biggest opportunity at the ballot box and it won with solid support. Factoring Utah (see below) and Missouri medical bills, nearly 20 million Americans wake up tomorrow with significantly more access to cannabis (medical or adult-use).


2. The Hemp Farming Bill seems like a sure thing-McConnell will push from the Senate and with a Democrat House, it seems like a hemp bill is almost a sure thing in short order since natural opponents (Republicans in the Heartland took a bit of a beating).


3. Pete Sessions, who was going to lose his Chairmanship with a Democratic House anyway lost pretty soundly to a cannabis proponent. As one of the biggest roadblocks to any federal cannabis laws, Sessions removal from Congress could get fence-sitting representatives to soften on cannabis descheduling or a move to throwing it to the States, as the States Act proposes. This was the single most important race in Congress for federal cannabis laws and voters certainly seemed to send a message here.


4. Governors Tom Wolf and Larry Hogan win in PA and MD respectively. Even though they are from different parties, each has pushed strong medical programs forward and been resolute in their support for medical cannabis. With Michigan now in the adult-use camp, expect these states to continue moving towards adult-use legalization, particularly since both governors won in a pretty big way. In PA, the fact that Republicans in the SE struggled or lost outright, seems to set up an adult-use law in 2019.


5. Tim Walz wins in Minnesota and has previously expressed his support for adult-use legalization. Minnesota has the same population as Colorado so adult-use would be significant there.


6. We think people may overreact to the Florida election and Desantis' victory in the gubernatorial race there. Florida has a strong medical program, and Desantis has been solid in his support of that. Gillum would likely have been a more certain advocate of adult-use, but we think Florida's rampant patient growth and continued limited licensing mitigates the disappointment in losing an opportunity for a Gillum-led push of adult-use forward. If you hold stocks with exposure there, this election shouldn't concern you.


7. Utah, which saw significant opposition for its medical bill from the Mormon Church, now has a medical framework, following Oklahoma as a surprising state to move forward with medical legalization. It's a great bellwether for the will of people and their representatives from deep red states to move forward with some federal reconciliation of cannabis laws.


8. Cuomo's easy victory in NY could give him the confidence to move ahead with adult-use in NY. We think it’s almost certain that NY moves forward before the next presidential election, particularly with a commission already in place working on such a bill because NY does not have a ballot measure law, so this must be passed legislatively, which can often be quicker.


9. Dana Rohrbacher is in a dogfight; as one of the early Republicans to support cannabis law reform, it would be ironic if he lost in a year where cannabis won big in most states. (UPDATE: He lost).


10. Mexico looks poised to try and push some type of adult-use legalization which would put further pressure on the U.S. to reconcile the State/federal legal dichotomy. Not U.S. election news but it was released today and hey, it’s still something we are watching tomorrow.

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