Breakthrough Cannabis legislation now before Congress
The Reefer Madness days are over. A recent Quinnipac Poll shows that 63 percent of Americans favor legalization. Members of the House and Senate now likely lean more toward legalization especially considering the huge tax revenue potential for states.
The term “gateway drug” has faded from the discussion and the medical benefits have been widely praised by both sides of the aisle.
There are currently two bills before congress that can totally change the cannabis industry and open the floodgates for major growth in 2019.
H.R. 420 AKA REGULATE MARIJUANA LIKE ALCOHOL ACT
H.R. 420 was introduced into the House of Representatives in January. Though the name is a bit tongue in cheek, this bill, when passed, will change the classification of cannabis by removing it from the Controlled Substance Act list that currently categorizes marijuana as a Schedule 1 substance “with no currently accepted medical use and a high potential for abuse.” H.R. 420 basically legalizes Cannabis on a national level.
Enforcement of marijuana law would move from the DEA to the renamed ATF that would become the Bureau of Alcohol, Tobacco, Marijuana, Firearms and Explosives. The FDA would regulate marijuana the same way it regulates alcohol.
Rep. Earl Blumenauer (D, Oregon), who introduced the bill said, “Our federal marijuana laws are outdated, out of touch and have negatively impacted countless lives. Congress cannot continue to be out of touch with a movement that a growing majority of Americans support. It’s time to end this senseless prohibition.”
A similar bill was introduced by Sen. Ron Wyden (D, Oregon) called S. 420 aka Marijuana Revenue and Regulation Act. “The federal prohibition of marijuana is wrong, plain and simple,” Wyden tweeted. “Too many lives have been wasted, and too many economic opportunities have been missed. It’s time Congress makes the changes Americans across the country are demanding.”
H.R. 2215 & S. 1152 - THE SAFE BANKING ACT AKA SECURE AND FAIR ENFORCEMENT BANKING ACT
Perhaps more significant, the SAFE banking Act, alleviates a major issue for those who own a cannabis business or work in it. Currently because marijuana is federally illegal, banks cannot do business with anyone involved in the cannabis industry meaning that basically business must be cash only and that cash cannot be deposited in any bank.
They cannot accept credit cards. They cannot write checks or make wire transfers to pay bills. If you work in the cannabis business even if you are not an owner, you cannot deposit your pay into a bank, get a car loan or mortgage. And technically, any building or vehicle used to sell or distribute recreational or medical marijuana, can be confiscated. Cannabis companies cannot list on any of the U.S. stock exchanges.
With the huge amounts of cash generated and inability to use traditional banking services, this is a serious roadblock to growth.
Calling the current situation “untenable,” Treasury Secretary Steven Mnuchin told a House committee, “I assure you that we don’t want bags of cash. We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe.” The American Bankers Association is onboard and aggressively lobbying to rectify the situation.
When passed, the SAFE Banking Act will protect financial institutions doing business with state-legal cannabis operations. TJ
These two bills will pass in 2019 and change the cannabis playing field. By basically legalizing marijuana and opening up the use of traditional financial institutions to conduct business, more mainstream companies will feel comfortable aggressively getting into the emerging cannabis industry with its high revenue potential.
With the ability to list on the U.S. Stock Exchange, investment dollars will be more available for start-ups and major growth for existing companies.