What happened

In early afternoon Tuesday trading, shares of marijuana stocks are taking another tumble -- their second day in a row of negative returns. Tilray (TLRY), for example, is down 7.2% at 12:35 p.m. ET. Less visible, OTC-listed stocks like Curaleaf Holdings (CURLF 2.02%) and Cresco Labs (CRLBF 2.49%) are suffering a bit less, down 3.5% and 3.7%, respectively.

All three stocks, however, have just one catalyst to blame for their troubles: Congress.

So what

Why? As weed legislation-tracker Marijuana Moment reported this morning, the U.S. Congress has finally and affirmatively (for now) decided not to pass the SAFE Banking Act that would have legalized banks providing financial services to marijuana businesses in the U.S.  

As previously reported, Congress first hoped to tack this marijuana legislation onto the Pentagon's National Defense Authorization Act (NDAA) earlier this month -- but that effort was rejected. Next, Senate Majority Leader Chuck Schumer made a "last-ditch effort" to get the SAFE Banking Act approved as an omnibus congressional spending bill. But this morning, the bill appeared -- and SAFE was nowhere to be found within it.

Adding insult to injury, MM reports that the spending bill does include a clause that forbids the District of Columbia from spending local tax dollars to implement a citywide legalization of marijuana at the local level. And it would appear that a provision that since 2014 has forbidden the Justice Department from interfering in state medical marijuana programs was stripped from the Senate version of the spending bill.

Now what

So where does this leave marijuana investors today? Not entirely without hope, it seems.

MM notes that it's still "theoretically possible" that marijuana backers will quit trying to shoehorn SAFE Banking into other legislation and just pass it as its own bill. Then again, time is running kind of short for that -- Congress is set to recess for the year tomorrow. Moreover, if the legislators thought they had the votes to pass SAFE on its own, it's unlikely they'd have spent the better part of this year trying to piggyback it atop other legislation.  

At this point, MM contends (and I agree) that it looks pretty certain that SAFE will have to wait for 2023 and the next Congress for another attempt at passage. Granted, by that time a new Congress will be in session, and control of the House of Representatives will have shifted, but this doesn't necessarily doom SAFE. After all, both Democrats and Republicans have voted in favor of legalizing banking services for marijuana businesses in various other forms in the past.

Still, in all, it's a disappointing day -- and the close of a disappointing year -- for marijuana investors. As 2022 rolls to a close, Tilray, Curaleaf, and Cresco all remain as unprofitable as ever, and the prospects for marijuana legalization as far away as they were at the start of the year. No wonder the stocks are down.