The cannabis industry has faced some tough sledding throughout the summer, which was marked by numerous negative developments. Among the key summer events were the CannTrust Holdings, Inc. (NYSE: CTST) (TSX: TRST) scandal, the surprising ousting of former Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) CEO Bruce Linton, an FDA warning letter to Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF), poor earnings results, and more. However, several upcoming Fall catalysts could help stem the bearish tide and bring back some much-needed positivity to the cannabis industry.
One of the biggest upcoming potential catalysts is the planned SAFE Banking Act vote in the U.S. House of Representatives, which is set to take place during the week of September 27, 2019. The news broke as House Majority Leader Steny Hoyer (D-MD) announced “we will consider several bills under suspension of the rules, including H.R. 1595, the SAFE Banking Act of 2019, as amended.” Under the suspension of rules process, two-thirds of the House will need to vote in favor of the bill in order for passage.
Breaking Down the Highly-Anticipated SAFE Banking Act House Vote
The bipartisan bill seeks to pave way for hemp and cannabis companies to access the U.S. banking system. Over the past several years, cannabis and hemp companies operating legally under state regulations have been forced to remain largely cash-only, as financial institutions worry about potential fines and repercussions of banking marijuana companies.
Marijuana Moment reports that staffers are reportedly expecting the bill on the floor on Wednesday. While no additional amendments will be allowed once on the floor, the bill’s sponsor, Ed Perlmutter (D-CO), says he is working to “make a series of changes ahead of the vote,” in order to appeal more to Republican colleagues.
Among the reported revisions include specific language noting that banks that provide services to hemp/CBD, and cannabis companies would be fully protected from penalties made by financial regulators. The revisions will also seek to prevent financial regulators with targeting other industries, such as firearm companies, unless there is a valid reason.
“We are very pleased that the broad support for this much-needed reform has finally led to a vote,” Morgan Fox, media relations director for the National Cannabis Industry Association, told Marijuana Moment. “Small businesses cannot afford to delay access to financial services, and every day that traditional lending and banking is denied to the cannabis industry is another day that marginalized communities will continue to be left behind by the opportunities created in legal cannabis markets.”
If the SAFE Banking Act is passed by the House, it will then move to the Senate for debate and a vote. While there remains some uncertainty around how the bill with fair in the U.S. Senate, key senators like Banking Chairman Mike Crapo (R-ID) have noted their support for fixing the issue through legislation.
October Catalysts: Canadian Legalization 2.0, Potential Recreational Legalization in Mexico
October is shaping up to potentially be a major month for the global cannabis industry. After Canada’s recreational legalization in October 2018, the country is preparing for the next wave of legalization, which will include edibles, extracts, infused beverages, and more. Unfortunately, while the “legalization 2.0” is set to occur in October, experts note that there will likely be limited products available until around mid-December.
Market research firms see a robust edibles market in Canada, as recent surveys points to consumers’ preferences for a wide range of forth-coming edible products like gummies, chocolate, cookies, brownies, and more. Deloitte estimates the Canadian edibles market could generate C$2.7 billion annually.
Outside of North America, Mexico is positioned to potentially be the third nation to legalize recreational cannabis, after Uruguay and Canada. In February 2019, the Mexican Supreme Court ruled that the country’s recreational cannabis ban was illegal. Furthermore, the nation’s highest court notified Congress that it had “90 Congress working days” to effectively adapt its legalization to the decision. This effectively gives Mexican legislators until October 24, 2019 to come up with legalization laws.
Currently, there are ten different legalization bills that have been presented before the Mexican Congress. However, there is still a fair amount of uncertainty as to how new laws will actually look.
Overall, it has been a tough summer for the global cannabis industry. However, the stage is set for numerous positive regulatory changes to potentially take place, which should help badly beaten down cannabis stock prices recover. Regulatory improvements continue to be a key area of focus for the global cannabis industry, as acceptance and acknowledgment from governments continues to grow.