Marijuana legalization is fast approaching, and the frenzy that we?ve seen in buying up cannabis stocks shows a lot of optimism and excitement from pot investors. However, legalization might be going too fast, and it could create problems for the very government that is trying to push the issue forward.
Drug testing is no small issue
Earlier this month, the Toronto Transit Commission (TTC) conducted a random drug test of its employees, and although a small percentage failed the test, more than half tested positive for marijuana. In total, just 12 employees, slightly less than 1%, tested positive for marijuana.
The company tested for tetrahydrocannabinol (THC), which is the chemical that is behind the recreational high in marijuana. It is different from cannabidiol, which provides medicinal value to its users. The current tests take saliva samples and measure the amount of THC that is in a person?s blood.
THC is fat soluble, and that can cause problems
Testing how impaired a user is by how much THC is in their blood is not necessarily accurate. Since THC is fat soluble, this means that the chemical might not enter the bloodstream immediately, and it may be days after smoking that it does.
While the TTC states that in its testing, it looked for a high level of THC to avoid false positives, the obvious problem is, this won?t catch all impaired employees. The number of users under the influence of marijuana was probably much higher than the 12 that tested positive.
Why this could be a big problem
Accurately testing for marijuana is a double-edged sword for the government, because if you set the test to only look for those users that are significantly under the influence, then you aren?t able to detect other individuals that are impaired as well, which puts public safety at risk.
Although you can rely on other tests for impairment, it won?t be able to provide law enforcement with an accurate, non-subjective way of evaluating if someone is impaired.
However, if the test is set to detect lower amounts of THC, you could end up with false positives and non-impaired users being accused of being under the influence.
There is not a simple solution to this, and there isn?t a lot of time to sort this out before next July.
Why this matters for investors
Investors need to only look at what happened to this one restaurant chain when it scaled back its expectations for growth as an example of what could happen if we see the cannabis industry fall short of its sky-high expectations.
Companies like Canopy Growth Corp. (TSX:WEED) and Aurora Cannabis Inc. (TSX:ACB) are living off hype rather than tangible results. If we see the government put tighter restrictions for cannabis in light of these potential problems, then that will adversely impact the growth potential for the industry as a whole, and share prices will crash.
The government has rushed the issue of cannabis legalization without spending enough time and research on the matter to ensure that it is done safely and in the best interests of the public.
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Fool contributor David Jagielski has no position in any stocks mentioned.