The US cannabis industry quietly took a big step towards legalizing cannabis.
A bipartisan group of legislators reintroduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act to the House. This bill could have an enormous impact on the cannabis industry.
If this latest cannabis bill passes, and I expect it to happen by the end of the year, it could send these 7 well-positioned cannabis sector soaring.
For the first time ever, US cannabis companies would be allowed to access banking services with federally backed banks. It might sound crazy and hard to believe, but US cannabis companies are not allowed to bank at the four major US banks – JP Morgan, Bank of America, Citibank and Wells Fargo because these banks are all federally backed and banned from offering services to this ‘illegal industry.’
If the STATES bill passes, this banking restriction would most likely be lifted, giving US cannabis companies access to better financial services that would streamline operations and cut costs. Legislators are working to change the US banking restrictions that are hampering the cannabis industry.
STATES Act Could Support Uplisting
Most of the largest US cannabis companies are listed on Canadian stock exchanges – particularity the Canadian Securities Exchange (CSE). Many of these Canadian listed stocks trade in the US in over-the-counter markets – which do not carry the credibility and clout of being listed on the NYSE or NASDAQ.
If the STATES act passes, these US companies are going to immediately go for a US stock listing. They would get instant credibility, and it would also set the stage for big capital inflows into shares.
STATES Act Would Offer Protection
Individuals who are complying with state cannabis laws would be better insulated from federal intervention, essentially leaving it up to the states to make their own cannabis laws and regulations.
As you can see, the STATES Act could be an enormous win for the US cannabis industry with the ability to unleash huge growth in the sector.
Will the STATES Act Pass?
According to my analysis, I see three reasons why there is a high probability the STATES act will be signed into law by the end of 2019.
1 – Bipartisan Support
This is bill has strong support from both Republicans and Democrats – sponsored by six Democrats and five Republicans.
2 – Presidential Support
Back in 2016, President Donald Trump expressed his support for medical cannabis and his desire to defer to the states on the issue. More evidence of Trump’s quiet support of the cannabis industry emerged in 2018 when he signed the Farm Bill into law – making industrial hemp production legal in the US.
3 – Medical Cannabis Is Essentially Already Legal
A total of 47 states have medical cannabis programs. 10 of those states have legalized recreational cannabis as well. According to a poll from PEW Research last fall, 62% of Americans are in favor of legalizing cannabis.
Early Cannabis Industry Leaders Ready to Cash In
If the STATES Act passes, I expect it to give the global cannabis industry a huge jolt.
I have identified a group of cannabis companies that I expect to see the strongest upward moves.
These companies are:
- early industry leaders
- multi-state operators
- vertically integrated
- expanding internationally
We’re going to keep a good eye on these stocks and the STATES Act moves forward. It should get exciting!
Editor, Cannabis Stock Trades
About the Author & Cannabis Stock Trades
Michael Vodicka is an equity analyst with more than 20 years of experience in trading and investing. His research has been featured in some of the industry’s most respected publications.
He has been investing and leading investors in the cannabis sector since 2013. Now, Mr. Vodicka brings his expertise and guidance to the members of Cannabis Stock Trades.
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