What Is the Impact of a New Attorney General on Cannabis Stocks?

When President Trump appointed longtime and outspoken marijuana opposer Jeff Sessions as the U.S. attorney general, the budding legal cannabis space became nervous. Although Sessions may not have pushed against the decisions of some individual states to legalize marijuana use in certain cases, the prospect of federal legalization legislation under his authority was as dim as it had ever been. When President Trump then asked for (and subsequently received) Sessions' resignation from the post early in November, it seemed like a boon for the legal cannabis space. As Motley Fool points out in a recent report, marijuana stocks bounced upward on the news, based on a broad sense of relief across the industry. Even Canadian companies like Tilray (TLRY) saw a spike, in spite of the fact that they are not directly impacted by Sessions' work as attorney general.

Still, advocates for the legal marijuana sphere have reason to remain cautious. While Trump has appointed Matthew Whitaker as acting attorney general, he has retained a list of rumored candidates. Below, we'll explore some of the top prospective candidates' stances on legal cannabis.

The former mayor of New York City and current advisor to President Trump saw his name come up in discussions about the attorney general candidacy in 2016. Giuliani's tough-on-crime approach as mayor included a hard stance on marijuana. His office directed police to arrest individuals in possession of even a small amount of marijuana. It's unlikely that he would usher in a new wave of federal legalization if he were to serve as attorney general.

Chris Christie, the former governor of New Jersey, has a history of opposition to marijuana legalization. He referred to supporters of legalization efforts as wanting to "poison our kids." Nonetheless, Christie has more recently suggested that he supports the rights of individual states to make their own legislation regarding marijuana legalization.

Alex Azar currently serves as Secretary of Health and Human Services and may be a candidate for Sessions' replacement. Earlier this year, he indicated his belief that "there really is no such thing as medical marijuana," per the Motley Fool. Since that time, though, the FDA has approved a cannabidiol product made from marijuana treatment for certain types of epilepsy.

Another rumored candidate for the attorney general post is Florida attorney general Pam Bondi. Bondi has previously worked to uphold a ban across the state of Florida on smoking medical marijuana. Nonetheless, she has more recently given signs that her stance on legal cannabis may be shifting; in early November she issued an emergency rule to ease Florida patients' access to Epidiolex, the aforementioned FDA-approved cannabidiol product.

The stance of the next attorney general could have a significant impact on legal cannabis. However, Canadian companies will not be severely impacted, as they are not in operation in the U.S. However, the attorney general could disrupt the flow of medical cannabis from Canada to the U.S., impacting both the companies themselves, the research projects they conduct, and patients. The attorney general will also have a mandate to determine how the Department of Justice will prosecute federal marijuana laws that are currently on the books. Sessions had indicated his intention to adopt an aggressive approach, although the fact that President Trump has also suggested he may be willing to support the decisions of individual states with regard to marijuana laws could complicate this factor. In other words, it may come down not only to the new attorney general's feelings on legal cannabis but also to his or her willingness to go against President Trump.