The tide turns: Investments around the law to reform Schumer cannabis

By Tim Seymour and Brady J. Cobb, Esq.

After the Democrats took control of the White House, House of Representatives, and the U.S. Senate in January 2021, cannabis stocks soared into the New Year in hopes of significant advances in law reform, including the prospect of state legalization . As a result, while waiting for this legislation, the cannabis markets have fallen from their highs in January 2021, despite the fact that their cannabis agenda came quickly despite many comments from the Democrats.

On July 14, after rumors of publications for the past two months, Majority Leader Schumer unveiled the eagerly awaited discussion draft of the comprehensive cannabis reform bill he and Senator Wyden and Senator Booker have been working on since January. Although the bill contains sweeping reforms that are long overdue, the chances of the bill gaining the support of 10 Republicans in the Senate are slim, and based on previous testimony from some Democratic senators who received all 50 votes from that faction, it could also be a bridge too far. Schumer and his colleagues have put forward a wish list of laws for the industry that, while important for the growth of the sector and the associated social restitution over time, are not currently realistic or necessary.

Photo by Kevin Dietsch / Getty Images

The bill contains far-reaching reforms, including:

a) Deregistering cannabis from schedule 1

b) Offering deletions to individuals with cannabis convictions

c) Funding social justice programs through cannabis excise taxes

d) Transfer of regulatory control of cannabis to the FDA, ATF and TTB from the DEA, and

e) Maintaining government regulatory frameworks (which appears to contradict point (d) above) alongside other initiatives. The bill does not specifically address necessary banking and financial reforms, tax and 280e reforms, and / or how state and federal regulation of cannabis can be harmonized.

Obviously, Democrats are well positioned to take the first step towards historic and long overdue cannabis policy reform, but so far there has been more talk and less action in the halls of Congress. Schumer’s law doesn’t leave Republican lawmakers much room for compromise to be comfortable with.

RELATED: U.S. Supreme Court Justice Finds Federal Marijuana Laws Outdated

We believe that Schumer is able to solve important problems and take a pragmatic approach to passing laws that can be passed now, and that those laws will be a stepping stone to the broader, broader reforms that he is suggested. Even Supreme Court Justice Clarence Thomas, widely regarded as one of the most conservative judges on the court, recently threw his hat into the ring on cannabis reform when he said in a recent statement that “the federal government’s current approach is halfway in, Half -out regime, which at the same time tolerates and prohibits the local consumption of marijuana. This contradicting and unstable state of affairs weighs down the basic principles of federalism and hides traps for the unwary. “

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Now is the time for Congress, and the Senate in particular, to address banking and tax issues that can allow the industry to build on more solid foundations and provide minority / social capital applicants with access to affordable capital while we do dealing with the larger federal and social issues in the longer term.

Although the SAFE Banking Act was passed by Congress last month (with over 100 Republicans voting to give cannabis companies access to the federal banking system), Senate majority leader Chuck Schumer expressed reservations about the legislation and how it could undermine his own cannabis bill will seek broader reforms, including long overdue social justice measures. While we agree that SAFE does not go far enough to resolve our country’s ill-fated “war on drugs”, it would be the first major cannabis reform victory in Congress, and victory is victory.

RELATED: Chuck Schumer’s Long-awaited Federal Marijuana Legalization Bill Revealed: Will Entire Senate Accept It?

Social justice must be a critical part of broader reform legislation, but the reality of Washington DC policymaking is that it is a game of incrementalism and, in some cases, pragmatism, best illustrated by the motto of the late Jim Valvano during the miracle is summarized by NC State Wolfpack in the NCAA tournament, namely “Survival and Advance”.

If we really want to empower minorities and those negatively affected by this misguided war on drugs, industry must first have adequate access to capital and real banking services. If the leading U.S. cannabis companies don’t have access to traditional trade and investment banking while facing penalty taxes, minority small business owners won’t stand a chance of thriving

How about putting some points on the board?

The SAFE Banking Act is a rare bipartisan law supported by Republicans, Democrats, and the cannabis industry at large. In the House of Representatives vote last month, 15 more Republicans voted for the bill than in 2019 (when the SAFE Act was first introduced just to get derailed by the coronavirus pandemic). The sharp increase in Republican support coincides with the growing trend of legalizing cannabis products for medicinal purposes and for adults over the past two years at the state level.

Photo by Bloomberg Creative Photos / Getty Images

Since the SAFE bill was first passed, seven states have legalized adult cannabis. A bipartisan group of 34 U.S. Senators has signed up to sponsor or co-sponsor the SAFE bill, and the bill is backed by the American Bankers Association and a bipartisan group of governors and attorneys general.

RELATED: Schumer Learns He Hasn’t What It Takes To Legalize Marijuana

The passage of the SAFE Banking Bill would be the first time Congress passed a cannabis reform bill while serving as a stepping stone for members of both chambers to jointly address sensible and workable social justice, social justice and legalization policies. One of the immediate benefits of this legislation is to allow the government to accurately assess the size of this market and the taxpayer money it will generate (even the head of the IRS has stated that he wants the money in banks for regulatory reasons).

Federal taxation would unofficially shift the federal government’s treatment of cannabis from law enforcement to revenue generation, and the potential tax revenue that could be generated from the cannabis sector could be used to fund other key democratic initiatives such as the Infrastructure Act, which is currently being finalized will.

Fortunately, Majority Leader Schumer has made cannabis a priority, and the release of his comprehensive proposal is an exciting day for the industry and investors alike. But to get it across the finish line, Democrats need a two-step approach: first pass the SAFE Banking Act and win the historic first victory, while at the same time developing and building bipartisan support for a broader reform bill. The former will make the latter, including the Senate majority leader’s more complex bill, a reality.

Meanwhile, cannabis investors are no longer pricing in short-term access to Bundesbanks and cannabis stocks have retreated 20-30% from their mid-February highs. While investors are rightly focused on the long-term growth fundamentals, it should also prove almost as historic as forestalling the broader cannabis legalization movement to forestall the capital wall that will follow after the Bundesbank reform.

Tim Seymour is thePortfolio manager of the Amplify Seymour Cannabis ETF (NYSE: CNBS).

Brady J. Cobb, Esq, is the founder and former CEO of Bluma Wellness / One Plant Florida. He is also a board member of Captor Capital and a longtime cannabis advocate.

This article originally appeared on Benzinga and was republished with permission.