An influential Republican senator on Tuesday suggested there are strong grounds for reducing the vulnerability of banks that work with the booming marijuana industry. But analysts still sounded downbeat on the prospects of a bill protecting the financial sector from the gaps between state and federal cannabis laws.
“I think a case has been made pretty strongly here about the need to get the banking-industry issues related to cannabis resolved,” said Sen. Mike Crapo at the end of a Senate Banking Committee hearing titled “Challenges for Cannabis and Banking.” The Idaho Republican is the committee’s chairman.
But Crapo’s opening remarks and questions for witnesses indicated that Tuesday’s hearing was “more a favor for Sen. Cory Gardner” than a sign of a shift on cannabis by Crapo, said Ben Koltun, a senior research analyst at Beacon Policy Advisors. The hearing also had to do with “paying lip service to financial-service lobbying,” Koltun said.
Gardner, a Colorado Republican, is a co-sponsor of Secure And Fair Enforcement Banking Act. The bill aims to help the banks and credit unions that serve cannabis companies but face legal problems because marijuana remains illegal on the federal level, even as more states legalize it.
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“Crapo sounded noncommittal, though his line at the end about the industry issues on cannabis needing to be resolved will be taken by the industry as encouraging,” said Ian Katz, an analyst and director at Capital Alpha Partners. The SAFE Banking Act “needs Republican support, and other than Gardner, it didn’t really get any today,” Katz added.
Republican members of the committee largely missed the hearing, and that helped make Beacon’s Koltun pessimistic on the bill’s chances. Their absence “indicates that this is not a top priority for the GOP,” the analyst said.
“This is not to say that the SAFE Banking Act will not get passed eventually, but it doesn’t seem like there is enough Republican impetus to act in this Congress,” he added.
Read more about the hearing: Cannabis company’s CEO says unbanked status meant paying $3 million tax bill in cash
Koltun also noted that Democrats might not support passing only the SAFE Banking Act, given that some of them have pushed for bigger developments. For example, California Democratic Sen. Kamala Harris, a presidential hopeful, teamed up with New York Democratic Rep. Jerry Nadler on Tuesday to roll out a bill that would decriminalize marijuana at the federal level and expunge marijuana-related convictions.
Pot stocks were mostly lower Tuesday, led by a drop in Curaleaf Holdings Inc. shares CURLF, -1.99% after regulators sent a warning letter to the company. The ETFMG Alternative Harvest ETF MJ, -0.96% , which tracks a basket of such stocks, has advanced 17% this year, while the S&P 500 SPX, +0.02% has tacked on 20%.
This report was first published on July 23, 2019.