Share of cannabis stocks are rising after the U.S. House of Representatives approved the SAFE Act’s inclusion in the 2022 National Defense Authorization Act.
SAFE BANKING ADDED TO NDAA: On Tuesday, the U.S. House of Representatives approved the SAFE Banking Act, a bill that would enable banks to do business with cannabis companies without being penalized, be included as part of the National Defense Authorization Act, or NDAA. The measure, which has previously been passed by the House with bipartisan support, would bolster cannabis companies, which have been hindered by the need to deal in cash due to federal restrictions.
SENATE HOLDS CANNABIS CARDS: Alliance Global Partners Aaron Grey said in a Wednesday note that the inclusion of the SAFE Act in the NDAA is encouraging, but Senate actions via the reconciliation process will be key as the current version of the act is similar to the stand-alone bill. The analyst expects the act to have a better chance to be attached to the defense bill under Majority Leader Chuck Schumer than previous efforts, but remains cautiously optimistic on SAFE being included in the final NDAA. The inclusion could make a path for lawmakers to pass cannabis legislation in a must-pass bill, he said, but noted Schumer introduced his own bill, the Cannabis Administration and Opportunity Act, and passage of a cannabis bill could lead Congress too have cannabis fatigue. If passed, the biggest question would be if the bill could potentially allow plant-touching business like MSOs to uplist to major exchanges, which Grey believes would spark a rerating in the stocks. Even if companies are unable to uplist, passage will make finding custodians easier allowing more investors to enter the space. The analyst added business for large MSOs will generally persist as usual as they already have access to banking and other ancillary businesses.
SCHUMER IN CONTROL: The inclusion of the SAFE Act is a significant first step toward the incremental transition of legality of cannabis in the U.S., however there are still challenges for SAFE to overcome in the Senate and in committees to stay part of the NDAA, Roth Capital analyst Scott Fortune said in a Wednesday note. The analyst said he believes the act has an easier chance to pass Senate through its inclusion in the NDAA, but Majority Leader Schumer will have to evaluate including SAFE in the Senate version of the defense act, which may potentially impede his passing of the Cannabis Administration and Opportunity Act. Schumer may approve SAFE to pass with the NDAA in order to enact some cannabis reform ahead of mid-term elections, Fortune said, although there is a possibility SAFE could be eliminated as part of the Senate floor process. The analyst views it as unlikely though due to bipartisan support and no Senator wanting to delay the NDAA bill. If passed, the act could spark a change at FinCen and around anti-money laundering guidance to offer enough protection for U.S. operators to potentially uplist to U.S. exchanges, he said. The analyst added any incremental positive marijuana legislation being passed is welcomed, but he believes full-scale legalization is years away. Fortune reiterates his bullish view on larger, scaled MSOs which he believes should continue to see success in any regulatory environment.
PRICE ACTION: At time of writing on Wednesday morning, Canopy Growth (CGC) rose approximately 6% to $14.33, Cronos Group (CRON) was up 4.5% to $5.93, Tilray (TLRY) increased 4.9% to $11.77, Goodness Growth (GDNSF) rose 3.6% to $1.61 and Trulieve (TCNNF) was up 3.4% to $27.24.
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ZYNE
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Trulieve Cannabis
+1.74 (+7.07%)
Tilray
+0.46 (+4.10%)
IGC Pharma
+0.03 (+2.01%)
Green Thumb Industries
+1.142625 (+4.48%)
Goodness Growth
+0.095 (+6.51%)
Trees Corporation
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Cronos Group
+0.19 (+3.35%)
Canopy Growth
+0.77 (+5.70%)
CV Sciences
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Aurora Cannabis
-0.03 (-0.50%)