After the U.S. House of Representatives decided to add an amendment in the National Defense Authorization Act (NDAA) that protects banks that serve state-legal cannabis companies from penalties, cannabis stocks soared on Wednesday.
Wednesday is shaping up to be a fantastic day for marijuana stockholders. In 1:50 p.m. EDT trade, Sundial Growers (NASDAQ:SNDL) shares are up 1.1 percent, and other cannabis stocks are doing much better. For example, Curaleaf Holdings (OTC:CURLF) is up 3.7 percent, Tilray (NASDAQ:TLRY) is up 4.6 percent, and Canopy Growth (NASDAQ:CGC) is the best of the bunch, up 6.2 percent.
The Secure and Fair Enforcement (SAFE) Banking Act, as amended, prohibits federal banking regulators from punishing banks that cooperate with state-legalized cannabis companies.
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The House of Representatives’ version of the SAFE Banking Act (a legislation allowing banks to deal with cannabis businesses) was recently added to the government’s 2022 National Defense Authorization Act (NDAA), which authorizes the Pentagon’s budget for the following financial year.
The bill also includes language that ensures that profits from legal cannabis-related companies are not deemed proceeds from illegal activity and thus are not liable to anti-money laundering regulations.
Allowing banks to lawfully deal with cannabis businesses, as Rep. Ed Perlmuttter reasoned yesterday, “would enhance the security of our financial system in our nation by keeping criminal actors like overseas cartels out of the cannabis sector.”
#SAFEBanking will strengthen the security of our financial system & keep bad actors like cartels out.
Most importantly, it will reduce the risk of violent crime in our communities.
It's passed the House 5 times. We cannot wait any longer to address this public safety threat. https://t.co/inwnn6ouR1
— Rep. Ed Perlmutter (@RepPerlmutter) September 22, 2021
The measure was originally proposed in 2013 by Ed Perlmutter. The congressman tweeted Tuesday that it has cleared the House five times but has yet to clear the Senate.
Rep. Mike Rogers, for example, has said that a marijuana legislation does not belong in the NDAA. He did acknowledge, though, that the SAFE Act is a “great piece of law.”
When Mitch McConnell was the Senate majority leader, he declined to put the measure up for a vote. Perlmutter may have been attempting to guarantee passage of the SAFE Act by putting it in a must-pass measure like the NDAA, according to Alliance Global Partners analyst Aaron Grey in a note released Wednesday.
Rep. Lou Correa stated that “cannabis consumers and companies are law-abiding individuals and entities,” and that forcing them to do all of their business in cash because banks are scared to service them “simply does not make sense.”
Also Read: After various Cannabis Groups’ Campaigns, Italy to Hold a Referendum Next Year to Take a Call on Cannabis Decriminalization
Perlmutter said on Tuesday that clear laws will help improve the banking system by preventing bad actors out of the cannabis business and reducing the danger of violent crime.
The NDAA is expected to be voted on by the House later this week.
The most pressing issue at this time, is whether the Senate will agree to approve the SAFE Act.
Cannabis shares were under stress as legalization hopes have faded, but they were recovering on Wednesday.
Curaleaf’s stock climbed 4.3 percent to $12.04 per share. Canopy Growth (CGC) rose 5.6 percent to $14.28, while Cronos (CRON) rose 4.8 percent to $5.94. Tilray (TLRY) is up 4%.