These Canadian Licensed Producers Rallied Off Of The Collapse In The Momentum Of The Safe Banking Act

Leading Canadian Licensed Producers (LPs) were a bright spot of the cannabis industry after the SAFE Banking Act was not included in the amended version of the National Defense Authorization Act (NDAA). 

On Tuesday, Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) traded approx. 5% higher after Wells Fargo & Company (NYSE: WFC) initiated coverage on the Canadian LP with an underweight rating and an $8 price target. Other large-scale Canadian LPs like Aurora Cannabis Inc. (TSX: ACB) (Nasdaq: ACB) and Organigram Holdings Inc. (TSX: OGI) (Nasdaq: OGI) traded more than 5% higher after the SAFE Banking bill was not included in the NDAA; and we will monitor how the sector continues to perform. 

The failure to include the SAFE Banking bill in the NDAA surprised many members of congress, cannabis executives, and industry analysts. A few months ago, the legislation was included in the House of Representatives initial version of the NDAA and the passage of the bill (with the inclusion of the cannabis banking bill) was expected to be a catalyst for the sector. 

Several leading US cannabis companies have recently come under pressure and we believe the market started to price in the potential for the exclusion of the SAFE Banking bill from the NDAA. The cannabis banking legislation included language that provided protection for banks that work with state-legal cannabis businesses and we consider the passing of the SAFE Banking bill to be a necessary step forward for the US industry. 

The failure to include the SAFE Banking Act in the NDAA did not go unnoticed and Rules Committee Chairman Jim McGovern (Democrat-Massachusetts) criticized Senate Majority Leader Chuck Schumer (Democrat-New York) who was a key voice against the passage of it. According to reports, Senate Majority Leader Schumer has been pushing for broad justice-focused cannabis reform legislation that should be addressed before the SAFE Banking Act.

Although we understand where Senate Majority Leader Schumer is coming from, we do not agree with his logic. By preventing cannabis companies from accessing basic banking services, he is creating unnecessary risk for owners and customers. The all-cash nature of the cannabis industry is attractive to criminals and we recently came across a story that discussed how dispensaries in California have faced an increasing amount of crime.

The US government needs to prioritize cannabis banking legislation and we will monitor how Canadian cannabis stocks continue to perform while cannabis legalization in the US remains challenged. 

If you are interested in learning more about the Canadian LPs that are benefiting from the SAFE Banking Act not being included in the NDAA, please send an email to support@technical420.com with the subject “Canadian LPs that are Benefiting From Confusion in the US Cannabis Industry” to be added to our distribution list. 

For the fastest access to data on Canadian LPs that are benefiting from the SAFE Banking Act not being included in the NDAA, sign up for our free newsletter!

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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.

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