Shares of cannabis multi-state operators (MSOs) are tumbling on reports that legislation that would legalize banking services for marijuana companies in the US is now unlikely to pass the Senate by the end of the year.
Attempts to include a version of the Secure and Fair Enforcement (SAFE) Banking Act, which would prevent federal banking regulators from imposing penalties on banks and other financial institutions for providing services to legal cannabis businesses, in the must-pass annual National Defense Authorization Act (NDAA) were opposed by Republican leaders.
Democrats had pushed for the inclusion of cannabis banking language in the NDAA to ensure it passed the Senate before their party loses control of the House in January.
READ: Cannabis stocks rise on Biden’s approval of landmark marijuana research legislation, reports SAFE Banking Act could pass by year-end
However, the NDAA was released on Tuesday without any references to cannabis, crushing any hope that legislation legalizing marijuana banking would pass by year-end.
A version of the NDAA with the language of the SAFE Banking Act included was approved by the House earlier this year.
The SAFE Banking Act as a standalone piece of legislation has attracted broad bipartisan support to date and it is understood Republicans opposed the use of the NDAA as a vehicle for this reform.
The market reacted negatively to the news, with the AdvisorShares Pure US Cannabis ETF down 8% and the AdvisorShares Pure Cannabis ETF falling 4.5% at mid-morning on Wednesday.
Earlier this week, cannabis stocks had rallied on US President Joe Biden’s signing into law of new marijuana research laws that make it easier for scientists to study the plant.
Contact the author at emily.jarvie@proactiveinvestors.com
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