Cannabis stocks surge ahead of ground-breaking congressional hearing on pot business banking rules
"These marijuana businesses need access to our banking system."
Congress doesn’t often talk about legal cannabis. It’s a subject they usually avoid, something most of them don’t understand or appreciate beyond the tax dollars it invariably channels into local and state governments.
That’s why February 13th's congressional hearing on cannabis industry banking was such a"big deal." It was the first ever hearing of its kind, and in it, politicians got together to discuss the many and frustrating obstacles that cannabis companies have opening and maintaining bank accounts in this country.
And perhaps not surprisingly, in the days leading up to this historic pot-talk, cannabis shares went up almost across the board as investors, eager to get their fingers in the-pot pie before it blew up, pitched cash at the stocks.
“Today’s hearing is a big deal,” said democratic, Colorado congressman Ed Perlmutter in his opening statements. “It’s a big deal for thousands of employees and businesses across this country who’ve been put at risk because they’ve been forced to deal with piles of cash, while congress stuck its head in the sand for the last 20 years.”
Presently, when it comes to managing the green coming out of the green industry things are stuck in a strange legal limbo. Because marijuana is still considered a schedule I drug, and selling it is still very much illegal at the federal level, most dispensaries deal largely in cash, which they have to hire teams of security personnel to transport, and teams of specialized accountants to process their income through the strange system curetly in place.
“The fact is, the people, the voters in states and localities all across the country are legalizing some level of marijuana use. And we need these marijuana businesses and employees to have access to our banking system,” Perelmutter said. “It will improve transparency and accountability and help law enforcement root out illegal transactions to prevent tax evasion, money laundering and other white-collar crime. But most importantly, though, it will help reduce the risk of violent crime in our communities. These businesses and their employees become targets for robbery and assault and all the more because they’re dealing in cash.”
Perlmutter’s proposed legislation has been dubbed the “SAFE Banking Act” and should it pass, it will make it far easier for cannabis businesses all over Colorado to run their income through established banks via credit and debit systems. This would reduce massive costs for dispensaries and represents a big step towards, not only normalization of these businesses, but also federal acceptance of cannabis as a legitimate industry.
“This bill would create a safe harbor for financial institutions and their employees who choose to do business with a marijuana company. It would protect ancillary businesses, real estate owners, accountant’s vendor and contractors by clarifying that the proceeds from legitimate cannabis businesses are not unlawful under money laundering laws or any other banking law.”
For cannabis businesses, that’s incredible news. As the federal government begins to begrudgingly accept this industry and the money coming out of it, more investors are going to be willing to step up to the pot plate and put money into these operations – cannabis dispensaries, grow ops, transport businesses and research opportunities will all flourish.
Which, explains the jump in share prices: investors want in early, because it’s only going to get more expensive from here.