Protections for US banks looking to do business with cannabis companies got an approving vote from the House Financial Services Committee.
Legislation in the US meant to protect banks that want to do business with cannabis companies was approved by a congressional committee.
A three-day meeting session of the House Financial Services Committee concluded on Thursday (March 28) with a 45 to 15 vote in favor of the Secure and Fair Enforcement Banking Act of 2019, otherwise known as the SAFE Banking Act.
The bill could grant protections to banking activities and allow cannabis companies to secure credit lines and other banking options previously unavailable due to the federal illegality of marijuana.
During her opening remarks on Tuesday (March 26), Committee Chair Maxine Waters (D-CA) said the group’s goal with the bill is to protect consumers. She described it as a holistic approach to criminal justice reform due to the impact of the criminalization of cannabis, particularly on those directly affected by its illegality.
Forbes wrote that the early victory for this bill, despite opposition from the GOP, shows “that the effective marijuana roadblock on Capitol Hill has been lifted by the chamber’s new Democratic majority.”
Marc Adesso, veteran cannabis attorney with law firm Waller Lansden Dortch & Davis, told the Investing News Network (INN) he still expects there to be a lot of time before any action is taken in Congress.
Allison Margolin, cannabis lawyer at Margolin & Lawrence, told INN the act doesn’t help only the marijuana business, but also provides significant relief to all the ancillary industries attached to the cannabis space in the US.
Both lawyers agree that the development of this act signals a clear change in sentiment towards cannabis policy at the government level.
Adesso and Margolin also see the SAFE Banking Act’s potential passing helping another critical cannabis bill still in the works.
“I think that the passing of the SAFE Banking Act could help to signal a larger shift in public opinion that may ultimately help legislation like the STATES Act to gain traction,” Adesso told INN.
The STATES Act is a policy bill aimed at offering similar banking protections and allowing the legal operation of marijuana companies at a state level.
“Obviously this would have a lot of momentum in getting the passing of the STATES Act as well,” Margolin said.
Several multi-state operators in the US have placed heavy bets on the passing of the STATES Act bill.
In response to the SAFE Banking Act vote, Murphy said the bipartisan support for this bill shows the US is a “step closer to aligning federal policies” to aid the cannabis industry.
Bloomberg reported that analysts at Cowen and Eight Capital share a bright outlook on the impact of the SAFE Banking Act.
Cowen analyst Jaret Seiberg indicated to investors that issues remain with Senate support for the bill moving forward, including the fact that Majority Leader Mitch McConnell doesn’t “want to debate cannabis on the floor.”
Mitch Baruchowitz, managing partner at Merida Capital Partners, told the Financial Post this bill would heavily disrupt the state of cannabis business relationships between US and Canadian companies.
“American multi-state operators like Acreage [Holdings] and Curaleaf Holdings (CSE:CURA,OTCQX:CURLF) are much bigger than most Canadian cannabis companies,” he said. “I can’t see the appetite for US banks to lend to most Canadian licensed producers over these multi-state operators.”
Marijuana legalization is poised to be a discussion topic for the upcoming 2020 presidential election, as several Democratic hopefuls to the candidacy have stated strong positive sentiment toward a clear-cut legalization path at the federal level.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Acreage Holdings is a client of the Investing News Network. This article is not paid-for content.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.