Marijuana News Today
The marijuana news today has us witnessing a potentially historic moment for pot legalization in the U.S. as one of the first truly federal marijuana reform bills passed the House with strong bipartisan support.
The Secure And Fair Enforcement Banking Act of 2019 (SAFE Banking Act) has passed the House with very strong numbers, by about a 75% margin, marking the first major piece of marijuana reform to be passed at the federal level in the U.S.—potentially paving the way for more to follow.
The SAFE Banking Act removes restrictions that are currently impeding the banking industry’s ability to support marijuana businesses due to fears that the federal prohibition against the drug could result in federal law enforcement seizing the proceeds from sales of pot in states where it’s legal.
This has been a contentious issue ever since the legal marijuana market in the U.S. began to bloom. The two most deleterious effects of the banking industry remaining at arms length from the pot industry has been marijuana companies’ lack of access to capital and the difficulty that those companies face in storing their profits.
This has resulted in a lot of cash-only transactions that have in turn led to a number of brazen robberies at marijuana dispensaries.
The SAFE Banking Act hopes to rectify these problems by permitting marijuana companies to fully access the banking industry to serve their needs, just like any other legal industry.
But the issue now is not the Democrat-controlled House, but the Republican-controlled Senate. While the bill received bipartisan support in the House, that may not translate into an easy victory in the Senate.
Having said that, it appears that there’s a decent chance that the bill will pass in the Senate. First off, it’s being sold to Republicans primarily as a banking bill. Which is to say, it’s more about removing restrictions on banks than about granting more privileges to pot sellers. (Source: “Marijuana expected to get traction in Senate — as a banking bill,” Politico, September 26, 2019.)
That’s a politically savvy strategy, seeing how Republicans typically consider themselves the pro-business and pro-bank party. Not to mention that the banking lobby in the U.S. is supremely powerful and could help convince some senate holdouts.
Of course, Senate Majority Leader Mitch McConnell has a lot of the power right now. He is generally the agenda-setter in the Senate and he could potentially find a way to kill the bill if he so chose.
Reports are that McConnell isn’t particularly opposed to this bill, and if that proves to be the case, there should be enough Republican support (along with the support of most Democrats) to pass the bill.
It doesn’t hurt that President Donald Trump hasn’t come out in opposition to the bill. While he hasn’t endorsed the bill, his silence on this issue is a good outcome. Alongside the fact that many Republicans come from “purple” states where marijuana is popular, the math begins to make sense.
While this isn’t federal U.S. legalization of marijuana—not even close—it is an important first step.
Seeing that marijuana legislation can pass at the federal level is heartening and likely to embolden marijuana reformers. Not to mention that politicians may grow braver if they don’t see a horrendous reaction from constituents if they pass the bill (on the contrary, some may actually see their popularity boosted).
Marijuana stocks, meanwhile, will benefit greatly from both the immediate impact of gaining access to a more comprehensive banking apparatus and seeing momentum build toward that inevitable day when marijuana will be legal in the U.S. (pot stocks will likely skyrocket as a result).
Much of the marijuana news today is focused on the historic passing of federal marijuana reform for good reason: the pot stock market has been in the dumps lately.
While September saw progress compared to the horrid summer, pot stocks began to backslide this week, with major losses across the board. While it may be an aberration, it’s also possible that marijuana stocks never fully exited the correction and instead were enjoying a brief but fleeting respite.
Many companies have seen significant losses over the past few days.
Curaleaf Holdings Inc (OTCMKTS:CURLF, CNSX:CURA) was one of the few pot stocks to see gains today. CURLF stock climbed nearly three percent in early-morning trading. But that was hardly enough to offset the stock’s 17% fall over the past five days.
While the recent movement by Curaleaf stock leaves much to be desired, that doesn’t change its overall long-term outlook.
Curaleaf remains one of the strongest pot stocks around, due to the company’s presence in many U.S. states and its forecast to be the first marijuana company to post $1.0 billion in revenue.
Remember that, even in its truncated state, the U.S. legal marijuana market is still the largest on earth and, therefore, CURLF stock—one of the few publicly traded companies operating in said market—remains in a very enviable spot.
One company that hasn’t had the same degree of regression as other pot stocks is Innovative Industrial Properties Inc (NYSE:IIPR). Innovative Industrial Properties stock gained more than one percent in early-morning trading today.
Over the past five days, IIPR stock has fallen about five percent, but that’s not all that bad, considering how poorly many of its compatriots have fared.
Worth noting is that, after Innovative Industrial Properties stock took a severe cut in its price, it’s now back to approaching $100.00. That’s a big victory for the company that saw its share price shrink to the $80.00 range at one point.
Innovative Industrial Properties is a special marijuana company due to it operating as one of the few marijuana real estate investment trusts (REITs). That means the company indirectly serves the marijuana industry by leasing land to producers.
And, as a REIT, it is mandated to distribute 90% of its profits back to shareholders.
This means investors gain exposure to the booming marijuana industry and receive a healthy dividend each quarter, all the while being generally insulated from the worst ups and downs of the market due to Innovative Industrial Properties’ indirect association with pot.
It’s a win-win-win that makes IIPR stock a very strong investment opportunity.
CURLF and IIPR Stock Performances
The performances of CURLF stock (black line) and IIPR stock (blue line) over the past week are seen in the chart below:
Chart courtesy of StockCharts.com
The marijuana news today is both very good and very bad. On the good side you have a historic federal marijuana bill with an actual chance of passing, proving that pot reform legislation can move through Congress.
On the flip side, we have had a horrendous few days on the pot stock market. Having said that, a few bright spots have emerged, with certain stocks performing decently despite the backsliding.