The Shape of Cannabis Legislation in Winter 2020

With the US elections in November and movement on other fronts regarding the classification of marijuana, the shape of cannabis legislation in winter 2020 is in flux in a number of ways that are of great interest to industry investors. Cannabis Growth Fund is keeping a close eye on proceedings in order to best serve the interests of those investing in our cannabis industry-focused managed mutual fund.

Marijuana Legalization Impact of 2020 Election

The US elections had several reasons for cheer for the cannabis industry. There were state ballot initiatives around the country to loosen legislation regarding cannabis. Several states voted to legalize marijuana for recreational adult use, and two voted to establish medical marijuana programs.

These states, with a combined population of approximately 18.1 million, voted for recreational marijuana:

  • Arizona (population 7.27 million)
  • Montana (population 1.03 million)
  • New Jersey (population 8.94 million)
  • South Dakota (population 885 thousand)

Additionally, these states (with a combined population of approximately 3.88 million) voted to establish medical marijuana programs

  • Mississippi (2.99 million)
  • South Dakota

These additions to the existing states and districts that have already legalized either recreational or medical cannabis will lend additional momentum to any efforts to remove cannabis and cannabis products from the crosshairs of the War on Drugs in 2021.

MORE Act Approved by House Rules Committee

Congress seems to be broadly behind the effort to pass legislation that will remove cannabis from the Controlled Substances Act. The Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act intends to remove marijuana from the federal Controlled Substances Act, reconciling the differences between federal law and the increasing number of states that have relaxed their substance laws. States and territories that have yet to legalize cannabis or cannabidiol (CBD) in any form (currently just Idaho, Nebraska, Kansas, and American Samoa) would not be compelled to, but those that have altered their substance laws would have their legislation accepted and supported by federal law.

While the MORE Act has passed the House of Representatives, and there are plenty of Senators that have spoken out about the need for cannabis law reform, hopes are not high for the prospects of the bill even getting a hearing in the Senate. Majority Leader McConnell has historically been very skeptical of any alterations to current drug laws, even though 9 out of 10 of his Kentucky constituents support medical marijuana, and almost 6 in 10 Kentuckians support recreational marijuana. Nevertheless, the MORE Act represents a significant step forward in terms of drug legislation, as the first time in 50 years that a chamber of Congress has revisited the classification of cannabis as federally controlled and prohibited.

Some Washington observers have speculated that this bold but doomed gesture is intended more as an indication to incoming President Biden that cannabis reform is one of Congress Democrats’ priorities for 2021, and perhaps one that could help him fulfil his pledge to ‘Build Back Better’. Despite Biden and Harris’ pledge to decriminalize cannabis, there was no mention of any plans to follow through on that in their transition notes.

United Nations Approves WHO Recommendation to Reschedule Cannabis

Even as legalization efforts sputter in Washington, in Vienna, the UN is slowly rolling towards a greater global acceptance of cannabis. The United Nations Commission on Narcotic Drugs (CND) accepted a World Health Organization (WHO) recommendation to remove cannabis from Schedule IV of the 1961 Single Convention on Narcotic Drugs. The recommendation, voted on by all members of the Commission, passed by a slim margin. The tally was 27 to 25, with one abstention, and supporters from all seven continents. However, the world’s most populous country, China, and four more of the 10 most populous countries (Brazil, Russia, Pakistan, and Nigeria) voted against, with only India, the United States, and Mexico in favor. Neither of the other two countries on that list, Bangladesh and Indonesia, are members of the CND.

The success of this endeavor is not likely to lead to immediate sweeping reform of drug laws in many countries. However, the CND is the main drug policymaking body in the United Nations. Its acknowledgement, however half-hearted, of the medicinal properties of cannabis will doubtless lend extra weight to arguments for descheduling or legalization in countries which place significant stock in the United Nations’ scheduling, further precipitating relaxation of international controls.

Cannabis Growth Fund and Marijuana Investment

The cannabis industry is growing as new markets open and restrictions are relaxed. Cannabis Growth Fund exists to help investors spread investments across a wide number of concerns in or adjacent to the cannabis industry, with active management to take advantage of favorable trends in the market. If you have questions about the Fund’s operations or any other aspect of the industry, we offer answers to many frequently asked questions about the cannabis industry.

Foothill Capital Management is the advisor of the Cannabis Growth Fund and is not affiliated with the distributor.


Statements, estimates and forecasts are subject to significant legal, business, economic, and competitive uncertainties, including competition, limited access to bank services, litigation, enforcement actions, and the receipt of government authorizations. This includes differences in, among other things, laws, regulations and guidelines relating to the manufacture, transportation, and storage of cannabis, and the conduct of operations, which vary among the U.S. federal government, various states, and foreign jurisdictions. There can no assurance that such estimates and/or forecasts will be realized, and these are not indicative of future investment performance. Historical data is not indicative of future performance.

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Investing involves risk, including possible loss of principal. The cannabis industry is subject to rapidly evolving laws, rules and regulations, and increasing competition which may cause such companies to change business model, shrink or suddenly close. These may limit access to banks, and create significant burdens on company resources due to litigation, enforcement actions, receipt of necessary permits and authorizations to engage in medical cannabis research or to otherwise cultivate, possess or distribute cannabis. Possession and use of cannabis is illegal under federal and certain states’ laws, which may negatively impact the value of Fund investments. Where legalized by states, cannabis possession and use remains a violation of federal law. The companies in which the Fund invests are subject to various laws and regulations relating to the manufacture, management, transportation, storage and disposal of cannabis, including health and safety, conduct of operations, and environmental protection. Even if a company’s operations are permitted under current law, they may not be permitted in the future, and a company may not be able to continue operations in its current location. Controlled substance legislation differs significantly between countries and may limit a company’s ability to sell products.

Foreign investing involves social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets involve different and greater risks, as they are smaller, less liquid and more volatile than more developed countries. Investments made in small, mid-capitalization and micro-capitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Fund investments will be concentrated in an industry or group of industries, and the value of Fund shares may rise and fall more than more diversified funds. Purchasing and writing put and call options entails greater than ordinary investment risks. Options ownership involves the payment of premiums, which may negatively impact Fund performance. Please see the prospectus for details of these and other risks. Distributed by IMST Distributors, LLC.