Sunburn Cannabis CEO Brady Cobb told MarketWatch that optimism on Wall Street and Capitol Hill that the SAFE Banking measure could finally pass this year does not appear to be overblown.
Cobb, a longtime advocate for cannabis reform, has been lobbying for the banking bill, which would open up the financial system to legal cannabis companies so they no longer have to face legal issues with their bank accounts or conduct business in cash.
Although some community banks and credit unions provide banking services to cannabis companies, the U.S. financial-services industry has been mostly closed off to the companies because cannabis remains a Schedule 1 Controlled Substance, along with drugs like heroin.
The SAFE Banking Act has a roughly 75% chance of passing Congress as early as this week, Cobb said. His view is comparable to that of Cowen analyst Jaret Seiberg.
Cobb’s estimate of a 25% chance of the measure failing stems more from the bitter partisanship on Capitol Hill than opposition to cannabis banking, he said.
Cannabis stocks cooled off Tuesday, with the AdvisorShares Pure U.S. Cannabis ETF
falling back by 11%.
The sector rallied Monday amid reports that the SAFE Banking measure would be attached to the National Defense Authorization Act (NDAA) being taken up this week on Capitol Hill.
Cobb said he’s also encouraged by a Politico report that said that after meeting recently with officials at the U.S. Department of Justice, Republican lawmakers were satisfied that the SAFE Banking measure won’t prevent the federal government from prosecuting illegal cannabis companies and money-laundering cases.
The fact that the Justice Department held the meeting with Sens. Charles Grassley and Pat Toomey in a timely fashion signals support from the Biden administration for SAFE Banking, Cobb said.
“This is something the administration is taking seriously,” he said.
It’s more likely Congress will include SAFE Banking in the omnibus spending bill rather than the NDAA, because the former typically includes tack-on measures while the latter is more a standalone piece of legislation, Cobb said.
Language in the SAFE Banking bill includes a mandate that the U.S. Treasury and the Financial Crimes Enforcement Network, FinCEN, provide guidelines about anti-money-laundering provisions and marijuana-related business guidance.
The updated guidance that SAFE Banking triggers would potentially allow cannabis companies to list their shares on the New York Stock Exchange or the Nasdaq, Cobb said.
In recent negotiations around SAFE Banking, the version that may appear in the NDAA or the omnibus bill will likely include the Hope Act, which provides states with funding to expunge records of people with marijuana convictions.
The SAFE Banking measure also calls for removing a question from federal firearms-permit applications about cannabis convictions as an obstacle to getting a gun license and to provide other protections for gun owners.
With the Toronto Stock Exchange signaling more flexibility recently on cannabis listings of U.S. cannabis companies such as Canopy Growth Corp.’s
U.S. business, the NYSE and Nasdaq will be able to revisit their listing protocols on U.S. cannabis companies once the updated FinCEN guidance is issued after the passage of the SAFE Banking ACT, he said.
“The exchanges want the business,” he said. “They don’t want to see the listings go to Canada.”
President Joe Biden’s signing of the Medical Marijuana and Cannabidiol Research Expansion Act on Friday would expedite research that is needed to complete the ongoing cannabis rescheduling process that the president ordered weeks ago, Cobb said.
Even conservative states such as Alabama and Mississippi have put medical programs into place, and politicians from those areas see SAFE Banking as a state’s rights issue that would allow local cannabis companies to bank their money safely, he said.