Cannabis: An Historic Day For The Industry (More Work To Be Done)

Yesterday was a historic and important day for the Cannabis Industry. 

After months of waiting, the long-awaited marijuana legalization bill from Senator Chuck Schumer (D-N.Y.), Ron Wyden (D-Ore.), and Cory Booker (D-N.J.) was released.

In addition, they released a discussion draft, launching a vital effort to bring people together to help shape the federal legalization process federally.  They're seeking feedback on the proposal until September 1. Cannabis FinTwit was full of ideas on both the positive and negative sides.

Cannabis legalization is political, whether one likes it or not. The discussion draft and press conference had a very political feel because the majority leader does not have the votes for the bill in its current form and is facing re-election.

The bill delves into numerous complicated policy issues, including federal regulations, states' rights, taxes, FDA involvement, and how to help those impacted by marijuana enforcement (more on these issues at a later date.)  

Although consensus thinking is that this is the first shot and that a SAFE ++ bill will ultimately pass, I'm not convinced of that conclusion.  One thing that was clear given the reaction of the stocks yesterday is that the comments made at the press conference demonstrate that corporations don't appear to be controlling the process. 

In addition, Majority Leader Schumer explicitly said he does not want "Big Tobacco swooping in and taking over."

Cory Booker shot down suggestions that an "easy banking bill" might move forward if more comprehensive reforms don't.  He went on to say "that passing cannabis banking legislation before taking steps to scrap old criminal records and put revenue from the cannabis industry back into communities that were most impacted by criminal penalties is a nonstarter. I don't know about other members of the Senate, but I will lay myself down to do everything I can to stop an easy banking bill that's going to allow all these corporations to make a lot more money off of this — as opposed to focusing on the restorative justice aspect."

Is he playing politics? He might be, but this is the critical issue facing the industry today, and there is no consensus on how to solve the problem.  This is also an industry paradox.

As @msauerbach said on Twitter last night, it "is right to want to get social equity right before the floodgates open on US listings and traditional pools of capital which will mainly help MSOs and SSOs of scale. This industry needs to be more diverse, and access to capital is the most significant barrier to entry." 

A passage of a SAFE ++ bill would address this serious public safety threat, but that should have been addressed years ago.  Now Republicans and Democrats are trying to agree on a bipartisan issue, yet the consensus is partisan. 

Complicating partisan politics is President Joe Biden, who opposes marijuana legalization. White House Press Secretary Jen Psaki said as much yesterday, putting him at odds with yesterday's historic moment.  Add to this; we have a Vice President with little political capital to help push this issue in favor of the industry. 

We are a long way from legalization, and there is an outside chance nothing happens on any bill before the midterms. So that puts into play that there is also an outside chance that we see no movement on legalization under Biden's term as President.

Sadly this is the state of Cannabis in the US, and it should be different. But, on the positive side, we have an awe-inspiring list of high-quality CEOs running companies in the US who want to see this country move from the political divisiveness and focus on the fundamentals and running their businesses. 

Fundamentally 1H21 was a solid period for the industry, and the 2H21 will shape up to be more of the same. When we hit 2022, we will see an acceleration in business with important new states opening up and more states coming online.

Earnings season is upon us!