What's being voted on
All eyes might be on Prop 64 in California, but the residents of Nevada also have a very important decision to make with Question 2 -- officially known as the Nevada Marijuana Legalization Initiative. If approved, Question 2 would legalize recreational marijuana for adults ages 21 and up, and it would impose a 15% excise tax at the retail level on consumers. Like most marijuana measures on state ballots this year, the revenue generated from legal marijuana sales would be used to enforce the measure, and as added funding for schools.
Nevada was actually the first state to get a recreational marijuana initiative on its ballot for Election Day. Nevada approved the use of medical cannabis in 2000, meaning it already has certain regulations and infrastructure in place.
What the polling suggests
Recently conducted polls suggest that supporters of Question 2 have a slight edge in Nevada, but it's no guarantee. Last month, the Las Vegas Review Journal polled likely voters and found that 47% favored the approval of recreational marijuana compared to 43% who opposed it. With a margin of error of 3.5% and 10% of voters undecided, this makes the vote almost too close to call.
However, in mid-September a poll from KTNV and Rasmussen Reports placed support at 53% compared to just 39% for the opposition. It's tough to get a good read on where support lies from such a small polling base, but the data is leaning toward approval rather than rejection.
What's at stake
It's unlikely that an approval of recreational marijuana in Nevada is going to generate as much buzz as in California, but it would nonetheless be another feather in the cap of the cannabis industry. President Obama has previously suggested that the best way to get the attention of Congress is to continue approving marijuana legislation at the state level, and this would certainly be another means to that end.
Furthermore, it could be argued that the transition to legal recreational marijuana would be pretty seamless. Considering that there's been an established medical cannabis industry in place for well over a decade, regulators have a good idea of what it takes to oversee the industry.
On the other hand, regardless of what happens in Nevada, it's probably going to be a smart move for investors to remain on the sidelines. Even if a few additional states approve their individual marijuana ballot measures, it could be years before the federal government considers another rescheduling of marijuana. For those who may not recall, the U.S. Drug Enforcement Agency declined to reschedule pot this past August.
As long as cannabis remains illegal at the federal level, it'll be very difficult for businesses to gain traction and grow their profits. Thus, even with double-digit growth potential, it could be nearly impossible, or downright risky, for investors to take part.
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