A Big Legislative Catalyst for Cannabis Stocks Is Coming Soon

By Chris Lange Updated Jan 30, 10:55PM EST · Published Mar 25, 1:20PM EDT

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A Big Legislative Catalyst for Cannabis Stocks Is Coming Soon — © Dmitry_Tishchenko / Getty Images

Cannabis stocks had a massive showing on Wall Street this past fall. In fact, most of the news flow surrounding these stocks had investors pouring money into them. Some of the stocks even doubled or tripled in value in this time. But now it seems that these weed stocks have become more normalized in the United States and legislation is on the way.

The Secure and Fair Enforcement (SAFE) Banking Act is expected to receive a full committee markup on Tuesday, March 26. This would be a huge step forward for the cannabis industry, not just in terms of a path to legalization but also a path to creating a robust industry.

For those unfamiliar with U.S. congressional parliamentary procedures, a markup is the process by which a congressional committee debates, amends and rewrites proposed legislation. In simpler terms, this is one of the first steps in the creation of a bill.

The SAFE Banking Act will come before the House Financial Services Committee for its first markup. Keep in mind that this will be the first time that a bill related to cannabis banking has ever received a markup by a congressional committee.

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What this SAFE Banking Act ultimately would do is prevent federal banking regulators from punishing banks for working with cannabis-related businesses that are obeying state laws or from halting their services, taking action on loans made to those businesses or limiting a depository institution’s access to the Deposit Insurance Fund.

The bill also would protect ancillary businesses that work with the cannabis industry from being charged with money laundering and other financial crimes, and it requires the Financial Institution Examination Council to develop guidance to help credit unions and banks understand how to lawfully serve cannabis businesses.

Morgan Fox, spokesman for the National Cannabis Industry Association, commented:

Allowing banks to work with the cannabis industry is vital for public safety, transparency and increasing access to capital for small businesses and marginalized communities. We are confident the SAFE Banking Act will pass through this markup and continue to gain momentum in Congress.

Major cannabis companies that could see a reaction to this vote include Aphria Inc. (NYSE: APHA), Canopy Growth Corp. (NYSE: CGC), Cronos Group Inc. (NASDAQ: CRON), Hexo Corp. (NYSE: HEXO) and Tilray Inc. (NASDAQ: TLRY).

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.