3 Cannabis Bills Investors Should Watch In 2022

Cannabis stocks took a beating in 2021, in large part due to the lack of progress on U.S. cannabis reform. Investors had high hopes after Democrats secured control of the White House and both houses of Congress in the November 2020 election, but Bank of America analyst Lisa Lewandowski said Wednesday that the Democrat-led 117th session of Congress has dropped the ball on cannabis up to this point.

“While many thought cannabis legalization was on the near-term horizon after the 2020 presidential election, those hopes have deflated over the past year,” Lewandowski said.

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Still, the latest national Gallup Poll in November 2021 found more than two-thirds (68%) of Americans are in favor of cannabis legalization, and Lewandowski said that political pressure could finally move Congress to take action in 2022. Lewandowski is tracking three important cannabis bills in particular.

Secure & Fair Enforcement (SAFE) Banking Act: The SAFE Act would prevent the federal government from terminating or limiting deposit insurance for a bank just because it provides services to cannabis companies operating businesses that are legal at the state level. The SAFE Act would not change the federal classification of cannabis as a Schedule 1 drug. The SAFE Act has now passed in the House five different times but was most recently removed from the National Defense Authorization Act (NDAA) of 2022 before the Senate voted on the bill.

Cannabis Administration and Opportunity Act (CAOA): The CAOA is a broader reform bill than the SAFE Act that was introduced in July 2021 in draft form by three Democrats: Senate Majority Leader Chuck Schumer, Senate finance committee chairman Ron Wyden and Sen. Cory Booker. The CAOA seeks to remove marijuana and THC from the Controlled Substances Act (CSA), allow for interstate cannabis commerce in all U.S. states and impose a 25% federal excise tax on marijuana. Since its initial draft, the CAOA has stalled and has not yet been officially introduced.

States Reform Act: The States Reform Act (HR 5977) was introduced by Republican Rep. Nancy Mace. The bill seeks to deschedule cannabis from the CSA but allow cannabis to be regulated or prohibited at a state level, similar to the way alcohol is treated. The bill would also expunge past federal cannabis convictions for non-violent and non-cartel-related offenses. The bill would also tax cannabis products in a similar fashion as alcohol and tobacco are taxed federally.

Benzinga’s Take: Among the three pieces of legislation, Lewandowski said the States Reform Act potential has the most bipartisan appeal. Significant progress on any of these bills in 2022, particularly in the Senate, could be a huge bullish catalyst for cannabis stocks and ETFs, such as the ETFMG Alternative Harvest ETF MJ and the AdvisorShares Pure US Cannabis ETF MSOS.

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