A worker inspects medicinal cannabis plants at a medical cannabis farm
ROBERT ATANASOVSKI/AFP via Getty Images
Cannabis stocks lit up Wednesday after the House voted to include an amendment in the National Defense Authorization Act protecting banks that service state-legal cannabis businesses from penalties.
The amendment, known as the Secure and Fair Enforcement (SAFE) Banking Act, prevents federal banking regulators from penalizing banks that work with cannabis businesses legalized by the state.
The bill also introduces language ensuring that proceeds from legitimate cannabis-related businesses are not considered proceeds from unlawful activity, which are subject to anti-money laundering laws.
Democratic Rep. Ed Perlmutter first introduced the bill in 2013. It has passed the House five times, but has yet to clear the Senate, the congressman tweeted Tuesday.
When Mitch McConnell served as Senate majority leader, he refused to bring the standalone bill to a vote. By including the SAFE Act within a must-pass bill like the NDAA, Perlmutter may have been trying to ensure the bill makes its way to the Senate floor, wrote Alliance Global Partners analyst Aaron Grey in a note issued Wednesday.
Perlmutter argued Tuesday that providing clear legislation would help strengthen the security of the financial system by keeping out bad actors in the cannabis industry and reduce the risk of violent crime, according to Marijuana Moment.
The House is slated to vote on the NDAA later this week.
Cannabis stocks have been under pressure as the prospects of legalization have waned, but they were rebounding Wednesday. Curaleaf shares were up 4.3% to $12.04 a share. Canopy Growth (ticker: CGC) shares increased by 5.6% to $14.28, and Cronos (CRON) jumped 4.8% to $5.94. Tilray (TLRY) rose 4%.
Grey cautioned the enthusiasm may be short-lived if the Senate refuses to pass some level of federal cannabis regulation. Moreover, he expressed concerns that the SAFE Act may be too limited in scope, and may hinder Congress from passing more comprehensive legislation.
“Overall, we believe stocks initially rise on initial optimism if the SAFE is passed, with further stock appreciation dependent on uplisting of plant-touching companies, and whether the SAFE Act passing delays more comprehensive cannabis bills being passed,” Grey said.
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