A Political Impasse is Stalling US Cannabis Reform
After clearing the House last week, the MORE Act now faces the Senate. Market experts from New Frontier Data break down what's next for US cannabis legalization.
A cannabis legalization bill has cleared the US House of Representatives in a significant win for changing perspectives on the drug. But with experts pointing to gridlock in the Senate, what happens next?
Last Friday (April 1), an updated version of the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act made it through the House for the second time in its history.
While the news has generated hype in the market, the bill now has to clear the Senate before it can be signed into law by President Joe Biden — and numerous policy experts have said there's no chance that will happen.
Here the Investing News Network (INN) breaks down why the bill doesn’t appear to be on the way to passing Congress, even though a recent Gallup poll shows cannabis legalization is supported by a majority of Americans.
Current political landscape prevents straightforward policy move
John Kagia, chief knowledge officer at New Frontier Data, told INN he’s not surprised to see the news-driven cannabis market pick up chatter based on the MORE Act vote.
However, he knows that despite the news, the context of the vote and the road ahead are more important.
“It's important not to presume that just because (the MORE Act was) able to clear the House, that it's going to get an easy run into the Senate,” Kagia said.
New Frontier Data is a cannabis-focused research and analytics firm that regularly publishes market reports.
The executive explained he views the Senate as a minefield for the bill. “In a much narrower and closely contested Senate, the ability to get the bills even tabled, let alone approved, tends to be a much higher hill to climb,” he said.
Kacey Morrissey, senior director of industry analytics with New Frontier Data, told INN that US politicians can see the projections for what a healthy, thriving cannabis industry in the country could bring.
She noted that for most experts, cannabis reform in the US is an inevitability. How the market gets there, however, is a different question to answer.
“Now I think we (are) just kind of splitting hairs, deciding who's actually going to benefit the most from this and how,” Morrissey said.
Have the Democrats failed by not achieving cannabis reform?
Following Biden's presidential victory in 2020, hopes about cannabis reform began to rise.
These expectations were quickly tempered as cannabis was not a priority for Biden's first 100 days in office, but when two Democrats won key Senate run-off elections — giving Democrats a fighting chance in the Senate — the potential for change was sparked again.
“There were perhaps unrealistically high expectations about how quickly this would go or how this might play out,” Kagia told INN.
As the situation stands, no cannabis reform has become law, and the issue hasn’t been present in direct words from Biden or Vice President Kamala Harris, despite campaign promises.
“Democrats had high hopes that, particularly during the first years of the Biden administration, there would be greater support from the administration to get this done,” Kagia said.
He told INN he thinks Democrats at large are “disappointed” with the current results.
According to the industry expert, the lack of support from Biden is clear to see. “We certainly have not seen any forceful amendment by the White House to try and get this done,” Kagia said.
In fact, there’s little indication Biden is on board the cannabis train — at least not with the current MORE Act.
A Marijuana Moment report indicates that White House Press Secretary Jen Psaki recently described the president as supportive of the need to “address the racial disparities and systemic inequities in our criminal justice system, broaden research on the effects of marijuana and support the safe use of marijuana for medical purposes.”
However, Psaki declined to outline Biden’s support on the MORE Act or any other specific cannabis policy.
In the past, Biden has also been shy about supporting adult-use cannabis outside of letting the states determine their own laws surrounding cannabis programs.
What to expect ahead of Senate elections later this year
Kagia said he thinks it is next to impossible for any cannabis reform to take place before the midterm elections.
These elections will determine key political outcomes later this year, which makes them a critical review moment in terms of voter satisfaction with the current administration and its policies.
Early projections show there is a heated battle brewing in the Senate for winning a leading majority.
As of April 6, predictor RacetotheWH shows Republicans have a 48.89 chance of gaining a majority in the elections this year. There will be 34 Senate seats up for election in 2022.
“There is a growing recognition and concession that something needs to be done to at least address some of the most pressing issues,” Kagia said.
When asked what his expectation would be for cannabis policy in a GOP-led Senate, Kagia said after midterms there is a higher chance of piecemeal reform even if Republicans control the upper chamber of Congress.
“We do think there's actually perhaps a higher probability that following the midterms, even assuming that Republicans take control of one or both chambers of Congress, that you might be able to see something like banking get through,” Kagia said.
Banking reform by way of the SAFE Banking Act would be a key victory for the business of cannabis in the US and its current players. It is a measure that is long awaited in the investment world.
Despite the lack of progress on federal cannabis policy, Morrisey emphasized that the growth in the US storyline for the drug is already happening at the state level.
“I think the big numbers coming out over the next two years are going to drive a lot of new things on the ballot,” Morrisey said to INN. “We're going to see the northeast and the south kind of break open — the northeast for recreational use and the south for medical.”
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
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.
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