What happened

Bad news for investors in marijuana stocks on Tuesday: According to cannabis reporter Marijuana Moment, the SAFE Banking Act may be in trouble.  

The new law, which has been under consideration for more than a year now, and which would finally make it legal for banks to provide banking services to marijuana companies (whose activities remain technically illegal under federal law), was supposed to be passed as part of the National Defense Authorization Act (NDAA) this year. (Yes, you read that right. Lawmakers are trying to attach a weed bill to a defense bill, to make the former easier to pass.)

But passage of the NDAA itself is now in question, and marijuana stocks are tanking on the news. As of 10:30 a.m. ET, shares of SNDL (SNDL 3.99%) -- formerly known as Sundial -- are down 4.3%. And they're falling right beside larger marijuana stocks including Tilray (TLRY 1.45%) and Aurora Cannabis (ACB 2.39%) -- down 6.5% and 7.4%, respectively.

So what

This is a little complicated, but here's the situation as it now stands: Earlier this year, the House of Representatives successfully attached the SAFE Banking Act to a bill approving the NDAA. However, worries soon arose about whether this combo-bill could pass the Senate. So the House is now working on passing a different version of the NDAA -- one that was already approved by the Senate -- and considering whether it can attach a modified version of the SAFE Banking Act (called "SAFE Plus") to this second version of a bill that it already approved.

Further complicating the issue, the House is apparently also considering adding to this bill -- and remember, this is basically a defense bill with some unrelated provisions tucked into it -- some Second Amendment language that would expand gun ownership rights. And as if that weren't all complicated enough, there's now talk of adding provisions to make it easier for employees of marijuana businesses to get a mortgage!

All of which calls to mind the old adage about legislation, sausage, and how no one should look at how either is manufactured.

Now what

For investors, all of the above basically boils down to one thing: The chances that Congress will finally lay groundwork for banks to provide banking services to marijuana companies, which would in turn lower their cost of doing business -- and grow their profits -- just got slimmer. What's more, with control over Congress poised to shift after the just-conducted midterm elections, it's even possible that all the progress toward marijuana legalization that was made over the past year will be upended in 2023.

If marijuana investors are feeling like they're caught in a dance of two steps forward, one step back (or even two steps back) today, that's entirely understandable. It's also entirely understandable why they might feel sufficiently discouraged at this point to give up and sell their marijuana stocks.