Cannabis stocks light up after a group of lawmakers again seeks to protect banks that work with legal marijuana businesses
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- Cannabis stocks jumped Thursday as lawmakers sought again to pass a bill to protect banks that work with legal pot firms.
- Tilray, Aurora Cannabis and Green Thumb Industries were among the stocks running higher.
- The SAFE Banking Act of 2023 was refiled by Democrats and Republicans in the House and Senate.
Cannabis stocks climbed Thursday after a bipartisan group of lawmakers took another run at passing legislation to shield financial institutions that work marijuana businesses operating legally.
The Secure and Fair Enforcement, or SAFE, Banking Act was refiled late Wednesday by House and Senate lawmakers from both the Democratic and Republican parties. They say the proposal is aimed at dealing with safety concerns stemming from legal cannabis businesses being locked out of banking services.
"Forcing legal businesses to operate in all-cash is dangerous for our communities; it's an open invitation to robbery, money laundering, and organized crime — and it's way past time to fix it," Senator Jeff Merkley, a Democrat representing Oregon, said in a statement accompanying the bill.
Republican Senators Steve Daines of Montana and Rand Paul of Kentucky, along with Senator Elizabeth Warren, a Democrat from Massachusetts, are among other cosponsors.
The AdvisorShares Pure Cannabis Exchange-Traded Fund jumped about 10% to a nearly two-week high, and the Roundhill Cannabis ETF soared 12% to a nearly one-month peak.
For individual stocks, cannabis cultivator and distributor Tilray surged 9%, Aurora Cannabis picked up 4%, Chicago-based retail operator Cresco Labs soared about 15%, and Green Thumb Industries, a retailer and edibles maker, rose 7%.
While more states have legalized medical and recreational use of cannabis, it remains illegal at the federal level, leaving banks vulnerable to federal laws and unwilling to provide services.
The SAFE ACT, if passed by Congress, would prevent federal banking regulators from prohibiting or penalizing a bank from providing financial services to a state-sanctioned cannabis business.
Regulators would also be unable to punish associated entities such as lawyers or landlords who provide services to a legal marijuana businesses.
A regulator, for example, could not terminate or limit a bank's federal deposit insurance because the bank is providing services to legalized cannabis operators.
The bill does require banks to comply with guidance set by the Financial Crimes Enforcement Network while allowing FinCEN guidance to be streamlined as states and the federal government adapt to policies for legalized medicinal and recreational cannabis.
The House on seven occasions has passed provisions clearing the way for cannabis businesses to use banks, but they haven't been able to land Senate approval.
Merkley said there's now a path for the first time for the SAFE Banking Act to move through the Senate Banking Committee and to a Senate floor vote.