Colorado Democratic Governor Jared Polis has been one of the loudest voices when it comes to passing legislation to change the banking and tax system for cannabis companies. Last week, he sent a letter to the Senate sponsors of a federal cannabis legalization bill that urged them to pass cannabis banking and tax reform legislation before advancing bills to end prohibition.

Although Governor Polis supports the Cannabis Administration and Opportunity Act (CAOA), he believes that other areas of the industry should initially be focused on. CAOA is legislation that would de-schedule cannabis and promote social equity. The bill is sponsored by Senate Majority Leader Chuck Schumer (Democrat New York), Senate Finance Committee Chairman Ron Wyden (Democrat Oregon), and Senator Cory Booker (Democrat New Jersey).

Governor Polis said, “I am thrilled that you are bringing forward a long-term, comprehensive solution that de-schedules cannabis while enhancing social equity pathways. I hope that you will first focus your efforts on the two biggest barriers to the success of the cannabis industry: banking and IRS Code Section 280E.”

280E makes business more challenging for cannabis operators as it prevents licensed cannabis companies from making federal tax deductions. The tax code only affects the cannabis industry and companies would be more profitable if it was removed.

Governor Polis also stated that the Secure and Fair Enforcement (SAFE) Banking Act has a better chance of being due to the amount of bipartisan support that it already has. On several occasions, the SAFE Banking Act has been passed by the US House of Representatives and we will monitor the legislation advances from here.

We believe the removal of the 280E IRS tax code is the biggest potential catalyst for US cannabis businesses. During the last quarter, we have seen an increase in the amount of support the cannabis industry has from major corporations like Amazon (Nasdaq: AMZN) and Uber (Nasdaq: UBER) and we consider this to be important overarching trend for the sector.

Before the end of the year, we expect to see some form of cannabis legislation passed by all houses of government in the US. We believe the US cannabis industry is at an inflection point and two companies that would benefit from the passing of key banking and tax reform legislation include: Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) and Aurora Cannabis Inc. (TSX: ACB) (Nasdaq: ACB).

If you are interested in learning more about companies that are positioned to capitalize on the US cannabis market, please send an email to support@technical420.com with the subject “US Cannabis Operators” to be added to our distribution list.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.