The legalization of medical marijuana and recreational marijuana have emerged as key talking points in the run up to the 2018 midterm elections.

Wall Street believes that the nation's burgeoning cannabis sector could prosper if pollster predictions that the Democrats are set to reclaim the U.S. House majority in the elections prove to be correct. 

A total of 31 states, the District of Columbia, Guam and Puerto Rico now allow for comprehensive public medical marijuana and cannabis programs, according to the National Conference of State Legislatures. On Tuesday, four more states could be added to those lists. Legalization of the drug for recreational use is on the ballot in North Dakota and Michigan, while voters in Missouri and Utah will decide whether to legalize cannabis for medical purposes. If all four ballots pass, they could push the country closer to federally legalized cannabis.

Source: National Conference of State Legislatures

"We believe this year's midterms will reinforce the notion that cannabis in the U.S. has (passed) the tipping point on its way to eventual full legal status," Canaccord analyst Bobby Burleson said in a research note reported on by Investor's Business Daily.  

"We think what we'll see tomorrow is going to speak volumes about the American appetite for getting their hands on God's medicine. We think Michigan in particular will tell a broader tale in terms of what it could portend for U.S. legislation," said CB1 Capital Management founding partner Todd Harrison on Monday.

Analysts agree that the Democrats taking the House will be good news for the sector, reported Bloomberg. This could represent a major breakthrough for cannabis stocks that focus on the U.S. market, such as The Scotts Miracle-Gro Co. (SMG), MedMen Enterprises Inc. (MMEN), MariMed Inc .  (MRMD) and Curaleaf Holdings Inc. (CURA). Democratic control of both the House and the Senate would offer the easiest path for proposed federal laws like the SAFE Act and the STATES Act. 

Clarity on banking rules, Bloomberg added, could help to close the valuation gap between the U.S. stocks and their Canadian counterparts, and even more so if reports that Attorney General Jeff Sessions, an opponent of cannabis legalization, plans to resign are true. 

Senator Lindsey Graham predicted on Monday that Sessions's departure now appears to be imminent, paving the way for a new attorney general early next year. "Jeff probably will step down,” Graham told conservative radio host Hugh Hewitt, according to Politico.

Most industry experts agree that replacing Sessions with a more pot-friendly attorney general would boost cannabis share prices. President Trump has not said much publicly about cannabis since taking office, but he is reportedly committed to ending the ban on marijuana. Former White House Communications Director Anthony Scaramucci has also said Trump supports legalizing marijuana on a federal level and is waiting until after the midterms to take action.