What happened
Tuesday was a great day to own marijuana stocks, as industry bellwether Canopy Growth (CGC +1.27%) led the charge higher on news that President Joe Biden has thrown his support behind federal legalization of medical marijuana. By the time the closing bell struck, Canopy Growth shares were up a whopping 24.4%.
Today, Canopy Growth stock continues growing higher, up 8.8% through 9:45 a.m. ET on further encouraging news out of Washington, D.C.
NASDAQ: CGC
Key Data Points
So what
Specifically, Senate Majority Leader Chuck Schumer gave a floor speech late yesterday in which the senator promised to make "progress" on cannabis legislation this year, as Marijuana Moment reports. Even more specifically, this progress will include reform to make it easier for banks to offer banking services to marijuana businesses -- the Secure and Fair Enforcement (SAFE) Banking Act.
Marijuana investors consider it a step forward for marijuana stocks, and a step along the long road to full-scale marijuana legalization. However, the U.S. House of Representatives has already passed this act several times in the past. Marijuana Moment reports that "nearly half of the Senate" -- 42 senators -- have signed on to cosponsor the legislation.
Now what
That's already a good sign that this time around, the SAFE Banking Act has a good chance of passage. When combined with the fact that the U.S. Department of Health and Human Services (HSS) is now recommending downgrading cannabis to a Schedule III controlled substance (similar to codeine, testosterone, or anabolic steroids), there now appears to be clear momentum behind marijuana deregulation, in whole or at least in part.
What remains to be seen is how quickly legislation will happen, and what form it will take. Descheduling cannabis would presumably make it easier to purchase, boosting revenue for marijuana companies like Canopy Growth. SAFE Banking Act passage, on the other hand, will reduce marijuana businesses' costs, boosting profits on that revenue.
Either option would be good news for marijuana businesses, the majority of which (Canopy Growth included) remain deeply unprofitable. But after such a long wait, at this point I suspect marijuana investors will take whatever they can get in 2023, and be happy for the "win."
