Cannabis stocks could heat up, says Roth Capital analyst

It’s been a frustrating few years in cannabis, where movement on federal reform in the United States has been a slow and difficult process. But good news could be on the horizon, according to Roth Capital Partners analyst Scott Fortune, who delivered a report on the industry on Tuesday, saying the passing of the SAFE Banking Act would be good for pot stocks.

US Senate Majority Leader Chuck Schumer recently sent a letter to fellow senators ahead of the summer legislative session where he outlined what he saw as the Senate’s priorities for the term, including making progress on bipartisan bills such as the SAFE Banking Act.

As reported in Marijuana Moment, proponents of the legislation are looking to see a vote taken up by the Senate Banking Committee in July, with Schumer writing that safeguarding banking for cannabis companies is one of the bills with which he is concerned for the session.

“Passing these bills will not be easy, and we will depend on cooperation of our Republican colleagues to get any of them done,” Schumer said in his letter, according to Marijuana Moment. “I applaud our committees and our caucus for the continued work to make positive and meaningful changes in the lives of every day Americans.”

First introduced and passed with bipartisan support in the US House of Representatives in 2019, the bill would protect banks from federal regulators in the event of their doing business with cannabis companies. Currently, cannabis companies in the US operate in states where legalization has occurred, either for medical use or medical and adult-use sales, but companies are often unable to be served by banks, who fear reprisal from regulators at the federal level, where marijuana is still considered a Schedule 1 narcotic.

This scenario has made it difficult for cannabis companies to conduct business, gain access to capital, etc., and so, it’s said that the passage of the SAFE act would be a boon to the industry. 

In his report, Fortune said the key to the bill’s passing will likely be the amendments attached to the current SAFE bill, with Fortune saying it’s likely that SAFE will be paired with the HOPE Act, which is focused on social justice expungements related to past cannabis convictions. 

“While the messaging and signalling of plans to move forward on cannabis banking have heated up, nothing is certain in Washington D.C., until a bill is fully signed and passed,” Fortune wrote. 

“We remain optimistic that SAFE will be voted on by the Senate Banking Committee at some point (potentially July), leaving the cannabis banking bill in Senator Schumer’s control of the additional markup process to bring to a Senate floor vote,” he said.

Fortune said if the Senate Banking Committee clears the bill this month, it will go to the Senate floor for a vote in early fall, with a House approval possibly in late 2023 or early 2024. All told, the SAFE bill passing will be good for the industry and cannabis stocks, Fortune said.

“We expect U.S. cannabis shares to move higher with clarity on potential SAFE passage, which could take a big step forward in July,” he said.