Since President Joe Biden won the White House and voters in five states passed marijuana reforms in November, optimism about the future of the US cannabis industry has grown. the Horizons Marijuana Life Sciences ETF is up around 100% since Nov. 3 – and that’s even after it has gone down a bit in recent weeks.

Many cannabis executives are optimistic that legalization in the United States may be imminent. Among them, the executives of the two companies are preparing for the latest mega-merger in the industry: Aphria (NASDAQ: APHA) and Tilray (NASDAQ: TLRY). Do they feel too much optimistic, or could the industry’s watershed moment be on the not-so-distant horizon?

Will legalization of marijuana take place during Biden’s presidency?

President Biden is not really keen on legalizing marijuana. He believes that “getting caught for smoking marijuana shouldn’t rob you of a well-paying job and career, a loan, or the ability to rent an apartment.” But while decriminalization seems likely, outright legalization was not a policy he campaigned on, although it would be the best case scenario for him. cannabis industry.

The only wrinkle, hHowever, it was the coronavirus pandemic, which severely damaged much of the economy and threw millions of Americans out of work. Creating new jobs is a top priority for Biden, and the possibility of doing so could prompt him to revisit legalization. According to a report from Leafly, the cannabis industry created at least 77,000 jobs in 2020. There are now 321,000 full-time jobs in the legal pot market. – that’s more than the number of paramedics and paramedics nationwide.

Cannabis executives expect legalization to happen soon and think it’s really just a matter of when rather than if. In a recent interview on CNBC, Aphria CEO Irwin Simon said he expects that within two to three years there will be a “fully legalized” marijuana market in the United States. United.

In January, Tilray CEO Brendan Kennedy was even more optimistic in an interview with CNBC, saying, “I expect pressure from North and South to eventually lead the United States to implement a federal program here for the next 18-24 months. ” He was referring to the marijuana reforms that have taken place in Mexico and the already completed legalization in Canada. The results of their reforms could leave the United States stuck between two legal pot markets.

But their expectations are not even the most optimistic. Canopy growth CEO David Klein said he anticipates his company will be operating in the United States within one year. He made the statement after Democrats won Georgia’s two second Senate elections, giving them full (albeit tight) control of both houses of Congress.

Investors should take these forecasts with a grain of salt

It is in a CEO’s best interests to build investor enthusiasm for their business – and legalizing marijuana would be great news for the companies mentioned above. The CEO of Aphria placed an asterisk on his expectations, saying that “there are a lot of unknowns about what will happen in the United States”

Investors should remember that these are just expectations, nothing else. There is no guarantee that legalization will happen during Biden’s presidency, and the marijuana reforms that cannabis executives are hoping for might not match reality. Decriminalization, for example, would be a big step for the industry, but it would do nothing for pot Canadian stocks looking to enter the US market. In the meantime, investors who are considering buying a company’s stock should think about that choice based on the merits of the company today, not what might or might not happen years later.

Given that 16 states (and DC) have legalized recreational marijuana and 36 of them now allow its use for medical purposes, it seems likely that legalization at the federal level is inevitable. But that doesn’t mean full legalization of recreation will take place in a year or two. It may just be medical marijuana that Congress decides to legalize, or decriminalization may go as far as it is willing to go. And it is also possible that Washington will not pass any cannabis laws for a while.

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Aphria and Tilray are on track to complete their merger in the second quarter. The combined company will have a larger pool of resources and assets, which will put it in a more solid position to capture a large share of the US market – once it becomes legal for it to do business here. Canopy Growth also has an interim agreement to acquire Area of ​​assets which is ready to use once legalization is complete. These companies could all be big players in the US market, but again, the problem is that there is no clarity as to when that market will be open to them.

Unless you think these companies are good investments today, however long it takes for Congress to pass cannabis legalization, you might be better off waiting to invest. The marijuana industry is full of volatility, and anyone can guess where these stocks will be when legalization hits. Don’t let the optimism expressed by insiders distort your expectations for the future, as it may disappoint you.