Sen. Bernie Sanders entered the Iowa caucus Monday as one of the frontrunners for the 2020 Democratic presidential nomination. His ascent in the polls is seen as potentially punitive for some industries and the related ETFs, namely those in the healthcare arena.

However, if Sanders does become the next occupant of the White House, his rise to the highest office in the land could be a boon to another industry and the related ETFs: cannabis. Funds, such as the Global X Cannabis ETF (NASDAQ: POTX), could get a “Bernie bounce” because the Vermont senator would call for federal legalization of marijuana.

POTX, the first cannabis fund from Global X follows a benchmark that holds “companies involved in the legal production, growth, and distribution of cannabis and industrial hemp, as well as those involved in providing financial services to the cannabis industry, pharmaceutical applications of cannabis, cannabidiol (i.e., CBD), or other related uses including but not limited to extracts, derivatives or synthetic versions,” according to Global X.

Federal legalization of marijuana in the U.S. widely viewed as the holy grail of the cannabis industry.

Picking Up On POTX Potential

“On my first day in office, through executive order, we will legalize marijuana in every state in this country,” Sanders recently said.

Looking at Cannabis ETFs, they are now priced at half off of where they were a year ago. More states are legalizing marijuana, and the Fed is allowing banking. In other words, many of these funds haven’t yet responded to some of the relevant, positive headlines seen last year.

“Good as that may sound for U.S. pot producers, he reserved a jab for these growing businesses,” reports Bill Alpert for Barron’s. “After promising to expunge the criminal records of those arrested for pot possession, Sanders promised to give industry control to minority communities that disproportionately suffered arrests and incarceration in the war on drugs.”

Related: Earnings Season Beckons for Cannabis Stocks 

As investors continue to favor more value-oriented equities, certain market niches are presenting themselves with attractive valuations relative to their current prices. One of those sectors is the still-nascent cannabis industry and value investors are starting to get into the weeds with these potential market opportunities.

“Marijuana’s criminal status under the federal Controlled Substances Act can only be changed by Congress, of course, but members of a Sanders cabinet would get the process rolling. The U.S. also has commitments under international treaties to treat cannabis commerce as illegal,” according to Barron’s.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.