Analysts Agree: Federal Cannabis Legalization Unlikely To Happen Soon, Does SAFE Act Have Better Chance This Year?

Federal cannabis legalization is unlikely to happen any time soon, according to analysts from Piper Sandler and Beacon Policy Advisors LLC. 

Marijuana Opportunity, Reinvestment and Expungement (MORE) Act is poised to end up on the House floor this week, but various marijuana industry experts are doubtful the measure will be approved in the Senate and become law.

"We believe passage again in the House is likely, but we continue to believe it is unlikely to pass the Senate in its current form," Michael S. Lavery, a senior research analyst at Piper Sandler, wrote in a note to clients, reported Yahoo Finance. "It still requires 60 votes in the Senate, a level of support we do not believe it has."

The MORE Act seeks to remove cannabis from the list of federally controlled substances and promote social equity in the industry. The bill would repeal the long-standing federal prohibition of marijuana by removing it from the Controlled Substances Act, ending the state/federal conflict over cannabis policies and providing state governments with greater authority to regulate marijuana-related activities, including retail sales.

While the House already approved the legislation in the closing weeks of the last Congress in 2020, the measure was never taken up by the then GOP-controlled Senate. It is expected to pass the House Rules Committee on Wednesday, and get a floor vote this week.

If it reaches Senate, which Senate Majority Leader Chuck Schumer (D-NY) pledged to push for, the bill will need 60 votes. This means that if every Democrat supports it, it would still need at least 10 GOP senators in order to become law.

Piper Sandler analyst Lavery doubts this scenario.

"Even among Democrats," Lavery noted, "Sens. Tester and Shaheen have spoken out against cannabis legalization, suggesting to us that the rally in cannabis stocks [on Friday] is premature."

What About The SAFE Banking Act? 

Andrew Lokay, an analyst from Beacon Policy Advisors LLC,  agreed, saying in a Monday note that the measure has only a slim chance of passing the Senate. He said the SAFE Banking Act stands a better chance of becoming law, reported MarketWatch.

"Once it has become clear that it doesn't have enough support to move forward....at that point, [Senate Majority Leader] Schumer could allow SAFE Banking to be attached as an amendment to must-pass legislation," Lokay said.

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