Shares of several marijuana firms witnessed a turbulent trading day after the U.S. Senate Banking Committee approved the Secure and Fair Enforcement Regulation Banking Act (SAFER Banking Act). This legislation seeks to enable banks to provide financial services to legitimate cannabis operations. Initially, stocks of major cannabis companies surged post the Senate's decision, but many of these gains were wiped out by day's end. Companies like Canopy Growth (ACB), and Cronos Group (CRON) reported drops in their stock prices, while Curaleaf (CURLF) experienced gains.
Despite the fluctuation in stock prices, the Senate's move is seen as a significant step forward for the cannabis industry. Previously, the SAFE Banking Act, an earlier version of this bill, had been approved by the U.S. House of Representatives multiple times but failed to clinch a Senate vote. Marijuana, despite being legalized either for recreational or medical use in around 40 U.S. states, is still illegal under federal law. This legal status has prevented cannabis firms from accessing essential financial services.
The existing limitations have curtailed cannabis companies' access to lending and financing. They've largely depended on cash transactions, which exposed them to risks like violent crimes. Boris Jordan, the founder of Curaleaf Holdings, remarked on the monumental achievement of getting the bill through the Senate banking committee. He highlighted the potential positive changes if Congress passes the bill, such as banks serving companies operating legally and the possible allowance of credit card usage.
Jesse Redmond from Water Tower Research commented that while the day's news was a favorable beginning, the broader journey is longer, and the stock market reactions were largely anticipated. Redmond expects more significant stock movements once the bill navigates through more challenging legislative phases.
