Rich went live late yesterday to bring you the breaking news that the US House of Representatives passed the long-foretold SAFE Banking Act. This act will give state-legal cannabis companies access to American financial institutions such as banks.
SAFE stands for Secure And Fair Enforcement. Rich, like nearly all cannabis industry watchers, celebrates the news.
“It’s not finalized, it just passed the house [and] it still needs to pass the Senate,” explains Rich. “But I think this is a great start for banking and cannabis companies in America.
Details of the SAFE Banking Act
In order to pass, the Act required a two-thirds majority of the House, which has been controlled by the Democratic Party since the 2018 midterm elections. Democrats were the primary supporters of the legislation, while Republicans were almost evenly split on it.
In the end, the Act passed 321-103, with 10 representatives abstaining from the vote. As Rich notes, the Senate must still vote on the Act later this year, and after that, it must go to the President for approval.
This is the first time that a congressional body has passed pro-cannabis legislation. Rich believes it’s a sign of things to come on the federal level.
“The SAFE Banking Act most likely will get approved [by the Senate] and that will mean legalization in America is coming,” says Rich.
Response from Cannabis Companies
Harvest Health & Recreation Inc (CSE:HARV) (OTCQX:HRVSF) was one of the first cannabis companies to officially comment on the passage of the act through the House.
Harvest Executive Jason Vedadi called the decision to approve the act “a significant step in the right direction,” in that it will help cannabis companies to safely and securely conduct business.
“This legislation will provide safety and security to the customers, patients, caregivers and employees that benefit from our industry,” he added. “It will enable cannabis companies and those working with them to decrease their dependence on cash and allow them to utilize our nation’s robust financial resources.”
Vedadi also believes the act can discourage the illicit cannabis market by introducing greater transparency into the sector.
“There’s too much money on the table [in the cannabis industry] for the government to pass up,” says Rich. “They need to legalize and get a piece of the pie.”
The passage of the SAFE Banking Act was precipitated by a recent increase in donations made to lawmakers by cannabis companies.
Affect on the Sector
According to MarketWatch, a number of cannabis companies saw their stock prices surge on the news that the House had approved the legislation.
Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB) gained about 5% in after-hours trading, while Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) grew 0.45%. Tilray Inc. (NASDAQ:TLRY) and Aphria Inc (TSX:APHA) (NYSE:APHA) also saw modest gains.
While the Canadian Marijuana Index didn’t grow on the passage of the SAFE Banking Act through the House, the news did put a halt to nearly three weeks of consecutive losses.
What do you think? Is American legalization of cannabis an inevitability at this point? Will US pot stocks see upward momentum in the coming weeks? Let us know what you’re thinking in the comments below.
Also, be sure to check out Rich’s video on the top ten pot stocks this month.
Featured image: DepositPhotos © VadimVasenin