As of Tuesday, we entered into the final stretch of primary season for the 2018 midterm elections here in the U.S. One thing is clear: the two parties couldn’t be more different. And it will really matter which side prevails for your wallet.
First, it’s important to take stock of the two main political parties…
Moderate Republicans are becoming an endangered species, as farther-right, pro-Trump Republicans continue to primary them out. Just take Mark Sanford.
He has been in both the House of Representatives and the Governor’s mansion in South Carolina. You may recall Sanford was also embroiled in the bizarre scandal that took him “through the Appalachian trail” and Argentina. Well, he eventually got back into politics, regaining his seat in Congress. But he was a staunch “anti-Trumper.” That hurt him. He lost his primary in June to a far-right-wing candidate.
Democrats, on the other hand, have similarly shifted their political leaning… to the progressive left. Bernie Sanders kicked it off two years ago, but has since been followed by the nomination (and likely election) of 28-year-old Democratic Socialist Alexandria Ocasio-Cortez. Similar to the Sanford primary, she beat out a long-serving, high-ranked Democrat in Joe Crowley.
On Tuesday, a second Democratic Socialist, Rashida Tlaib, joined Ocasio-Cortez. Tlaib is running unopposed in the general election in November, after winning her primary in Michigan this week. This, again, just goes to prove the movement and increased influence of the progressive wing of the Democratic Party.
If the polls are anything to go on, this two-sided shift in the political spectrum favor Democrats.
In one poll covering an equal balance of Democrats and Republicans in 30 Congressional swing-districts, the results were surprising. It found that 72% of these swing voters (which, one would think means quite moderate) favor Medicare for All. Eighty-one percent believes Entitlement programs Social Security and Medicare should have their caps eliminated to force the highest earners to pay more. The same percent believes corporate taxes should go back up.
These breakthroughs in the progressive-left mentality means that candidates and eventual Congresspersons such as Ocasio-Cortez will become more frequent seat holders in the Legislative Branch. And that means other policies favored by progressives will stand a greater chance of passage in the likelihood of a so-called “blue wave” in November.
While it is too early to say exactly how big that wave would be. Meaning we just don’t know if Democrats will control both houses of Congress, just one or neither at all. But for an investor, it’s important to consider these scenarios.
We know Trump is pretty far right on topics like immigration and gun control. He will also not be inclined to increase taxes on wealthy individuals or corporations. But if Democrats gain either the House or the Senate, which will give them subpoena power – or even both houses, which would let them send legislation of their choice to his desk – he will have to start cutting deals with them to keep any of his power.
There are a few policy options for this unnatural alliance, namely infrastructure spending, prescription drug prices and legalization of cannabis. This last one is a quite interesting possibility.
A recent poll found that 89% of U.S. voters support medical marijuana, 54% support outright legalization.
Despite this, Trump’s Attorney General, Jeff Sessions, is staunchly opposed to marijuana legalization, even medical marijuana. But he’s sort of on the outs with the President. Trump personally has had a much more nuanced, strange to say, opinion on the subject.
Back in 1990, Trump was a bit of a contrarian at the time. During an interview with the Miami Herald, he declared that to win the war on drugs, we should legalize them… specifically marijuana. During the campaign in 2016, he held that medical marijuana should definitely be opened up nationwide, and states should be able to legalize it from there.
He’s contradicted that statement from time to time too, saying that Colorado’s legalization was “a real problem.”
But his latest stance, from a statement in June, is that he would “probably” sign a bill that would end the federal ban on marijuana. That bill was actually sponsored by a Republican Senator, Cory Gardner (from Colorado). Similar bills are stuck in Congress signed by many leading progressive Democrats, like one sponsored by Bernie Sanders, Elizabeth Warren, Kamala Harris and Cory Booker (all of which could run as the progressive candidate for President in 2020).
So, clearly there’s a bit of room for an incoming Democratic Congress to work with the President. But what does all of this mean?
It means these efforts to legalize or at least move the issue from the federal government back to the states would instantly become “unstuck” in Congressional committees. The passage of a bill to give cannabis a better legal standing and open it up in new markets becomes increasingly likely. And that Trump would need a win after a potential blue wave election cycle makes it likely we’d also see a “green wave” come for the cannabis industry.
So, all of those stocks – connected either to growing cannabis, researching its benefits in drugs and treatments, distribution of legal weed or even just developing soil for the cultivation of the plant – would receive a huge shot in the arm by any blue wave, big or small.
This is a topic we’ll continue to track relentlessly as the midterms grow near. Keep an eye out for more.