Although the cannabis sector has significantly underperformed the market so far this year, we believe the tide is starting to turn after the United States (US) House of Representatives passed the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act.

This is the second time the MORE Act has been passed by the House and we believe a positive outcome in the Senate could prove to be the most significant catalyst for the entire cannabis sector.

The MORE Act would remove cannabis from the Controlled Substances Act (CSA), increase the amount of criminal/social justice reforms for cannabis, reinvest into communities that have been the most impacted by the war on drugs, and expunge historical non-violent cannabis convictions.

Despite the numerous benefits that are associated with the legislation, we do not expect the Senate to vote in favor of it. In order for the MORE Act to be passed by the Senate, we believe it would need to be supported by Senate Majority Leader Chuck Schumer who is expected to issue his own cannabis legislation later this month (the Cannabis Administration and Opportunity Act).

Two other reasons for our less than positive outcome on how the Senate votes on the legislation are the small majority between Democrats and Republicans and the potential impact of November’s midterm elections. The elections could have a major impact on the balance of power and the legislative priorities of Congress.

We believe the US is behind the curve with the cannabis industry and hope to see some form of legislation passed before year end. If passed, the MORE Act could provide companies with access to more traditional forms of banking services (i.e. mortgages, operating lines, and credit cards) and could make the 280E tax structure not applicable to plant touching businesses.

From allowing interstate commerce to listing on big board stock exchanges (i.e. Nasdaq or NYSE), the decriminalization of cannabis in the US would have a major impact on the industry. If passed, we would expect the cannabis sector to rally and have highlighted a few US multi-state operators (MSOs) that would benefit from legislation reform.

Body and Mind (CSE: BAMM) (OTC: BMMJ) – An MSO with leverage to several high-profile recreational cannabis markets
Red White & Bloom (CSE: RWB) – A US cannabis company that is focused on Michigan and other markets in the US
GrowGeneration Corp. (Nasdaq: GRWG) – A retailer with locations across the US that sells the products and services that are needed to cultivate cannabis

If you are interested in learning more about the US cannabis Industry, please send an email to support@technical420.com with the subject “US Cannabis Industry” 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.