America’s drug laws are a messy patchwork quilt — and that’s especially true for cannabis.

Eleven states and the District of Columbia have already legalized marijuana for recreational use. And all but eight states allow medicinal marijuana to some degree, or have at least partially decriminalized cannabis (or products like CBD oil).

cannabis stocks election

But, at the federal level, the legal cannabis industry remains in limbo.

Marijuana is still an illegal Schedule I substance under federal law. And businesses within the sector face a precarious existence. A fickle Justice Department could put them out of business at any moment.

There’s a reason that the larger players in this space, such as Canopy Growth Corporation (NYSE: CGC) and Cronos Group Inc. (Nasdaq: CRON), are domiciled in Canada instead of the good ol’ USA.

The fast-approaching presidential election in the U.S. may change that.

Ultimately, Congress wields more power than the president here, because it would be responsible for rewriting national drug laws.

But the executive branch has a lot of discretion in how it interprets and prosecutes the law. So the man in the White House matters.

Which election outcome would be more bullish for cannabis stocks: a second Donald Trump term, or a new Joe Biden administration?

How Would a Second Trump Term Affect Pot Stocks?

For a man who seems to have an opinion on everything, President Trump has been conspicuously silent on marijuana issues.

He considers it a state issue and has avoided addressing it further. It’s not a big enough priority for him to tackle at the federal level. But he doesn’t seem to mind states doing their own thing.

Trump’s choice of attorney general is more important here. And that’s a mixed bag.

Trump’s first attorney general, former Alabama senator Jeff Sessions, was an anti-pot crusader adamantly against legalization. Sessions resigned two years ago. His replacement was William Barr.

Barr seems to share Trump’s general lack of interest on the matter. In Senate testimony last year, Barr said that he considered the current legal situation “intolerable” because it put state and federal laws in contradiction of each other. He indicated support for de-federalization of marijuana regulation and just punting to the states.

We don’t know if Barr would stick around for a second term. But if he does, we’ll see more of the same: States will continue to loosen their drug laws, and the federal government will shrug.

If Congress passed a bill to legalize and regulate marijuana at the federal level, Trump would likely sign it. But he won’t make the first move.

Would President Biden Legalize Marijuana?

Democrats are a little more open-minded on soft drug use. But former Vice President Biden is no libertine when it comes to marijuana.

He’s supported the idea of “decriminalization,” but has stopped short of supporting “legalization.”

In other words, he wants to stop locking up the casual pot smoker in prison. But he’s not ready for marijuana to be sold and regulated like alcohol or tobacco. He wants more information on the potential public health effects before making a decision.

Biden’s running mate, Kamala Harris, has embraced full legalization. If the Democrats take the Senate and keep the House in November, they may pass a legalization bill. That election outcome would be huge for cannabis stocks.

And if they do, Biden isn’t likely to stand in the way by vetoing it. But if you’re looking for a president to push hard for legalization, Biden’s not your guy.

The Most Bullish Scenario for Cannabis Stocks

A Biden presidency wouldn’t be all that different from a Trump presidency when it comes to the legalized pot industry. It will come down to which party takes Congress.

If we see a “blue wave” in November, then full legalization is likely.

It’s an easy, low-risk win for Democrats and something that would be broadly popular to their base. This would be bullish for pot stocks.

But if the Republicans hold on to the White House, or at least one house of Congress, we’ll probably see more of the same. That election outcome isn’t bearish for cannabis stocks, but it’s not wildly bullish either.

Money & Markets contributor Charles Sizemore specializes in income and retirement topics. Charles is a regular on The Bull & The Bear podcast. He is also a frequent guest on CNBC, Bloomberg and Fox Business.

Follow Charles on Twitter @CharlesSizemore.