Cannabis Banking Reform Continues Slow Crawl Through Congress, Relief Remains Critical for Stocks

Cannabis regulatory reform appears to have made moderate progress in the US Congress, with the Secure and Fair Enforcement (SAFE) Banking Act likely securing a filibuster-proof, bipartisan voting majority on the Senate floor. Though the bill has passed the House of Representatives several times, it has been consistently stonewalled in the Senate. Committee approvals remain a key roadblock to an eventual vote, but may be overcome in the ongoing summer session.

Eliminating limits on the cannabis industry’s ability to access banking services would cut costs significantly, likely unlocking improved performance among share prices that have been smashed by rising interest rates and inflation, as well as overflowing inventories of marijuana and other cannabis products. Though 10 US markets are expected to generate more than $1 billion in recreational sales of cannabis this year, less than a quarter of operators report being profitable enterprises.

Related ETFs: AdvisorShares Pure US Cannabis ETF (MSOS), ETFMG Alternative Harvest ETF (MJ)

Bipartisan support for cannabis banking reform in the US continues to gain steam, as Senator Susan Collins (R-ME) added her name as a co-sponsor to the Secure and Fair Enforcement (SAFE) Banking Act last Thursday, meaning the bill now has eight Republican cosponsors – just one potential vote shy of avoiding a filibuster in the Senate. Though not currently a cosponsor, Senator Tommy Tuberville (R-AL) confirmed his support for SAFE in mid-June, meaning that the bill has secured the votes needed to proceed to a vote without the prolonged and prohibitive delay a filibuster would present on the Senate floor. The decision on whether to move forward with a vote will fall into the Democrats’ court – a coalition of lawmakers that almost wholly support the decriminalization of cannabis, but often disagree on how to go about enacting legislative reform. Senate Majority Leader Chuck Schumer (D-NY) said last week that cannabis banking legislation is a priority for July, but progress on the bill may once again get held up in the Senate’s banking committee.

The SAFE Banking Act, which would allow banks to legally handle the proceeds from a state-legal cannabis business by prohibiting certain federal banking regulators from taking adverse actions against banks and credit unions that provide services to “cannabis-related legitimate businesses”, has been around for several years and has passed the House of Representatives seven times, only to be…