New Bipartisan Bill Would Allow Cannabis Stocks To Access Financial Services And List On NYSE, NASDAQ

Rep. Troy A. Carter (D-LA) and Rep. Guy Reschenthaler (R-PA) presented a new bill Thursday that aims to provide many benefits to the challenging cannabis industry.

Among the most important provision in The Capital Lending and Investment for Marijuana Businesses (CLIMB) Act, is the one that would allow listing on national securities exchanges, such as the New York Stock Exchange and NASDAQ, according to Forbes. 

The news came on the heels of the Senate's rejecting the Secure and Fair Enforcement (SAFE) Banking Act for the sixth time. SAFE Banking Act aims to protect financial institutions that wish to provide their services to state-legal marijuana businesses.

At the moment, marijuana operators are not allowed to list on national securities exchanges, because cannabis is still a Schedule 1 drug, and as such illegal at the federal level. This is also the main reason why cannabis businesses had difficulties accessing capital, as major financial institutions won’t provide them with their services. 

“Cannabis companies have always struggled with access to capital, and the NYSE and Nasdaq will not list cannabis companies with U.S. operations because those operations continue to be illegal at the federal level,” Sander Zagzebski, a corporate and securities lawyer at Clark Hill and co-chair of its international cannabis practice group, said. “Because cannabis companies cannot list on U.S. exchanges, they generally list on the Canadian Securities Exchange and trade only on the OTC markets in the U.S. if at all, which significantly limits institutional support and contributes to increased volatility.”

The CLIMB Act was presented “to permit access to community development, small business, minority development, and any other public or private financial capital sources for investment in and financing of cannabis-related legitimate businesses.” The bill starts by offering a safe harbor for this activity. 

American Dream 

“The bipartisan CLIMB Act is a huge opportunity to bring equity and equal opportunity into our nation’s burgeoning cannabis industry,” Carter said in a press release. “From my work on the Small Business Committee and by working directly with small, minority, and veteran-owned cannabis businesses, it’s clear that access to capital remains one of the biggest barriers to entry and to success in the industry.”

“By bringing symmetry into the business ecosystem with the CLIMB Act, we can help communities that have long been harmed by the criminalization of marijuana move to now be leaders in the business sphere—and that’s what the American Dream is all about,” he said.

Reschenthaler added: “This bipartisan legislation will boost the economy, create jobs, and level the playing field for American businesses.”

Perfect Timing 

As Zagzebski highlighted, the timing of The Climb Act couldn’t be more perfect, with cannabis stocks being down. 

“Publicly traded cannabis companies are trading at or near all-time lows,” Zagzebski said. “Thus, the CLIMB Act, if passed, could be a welcome shot in the arm for the entire industry, because it would provide access to U.S. exchanges for qualifying companies, would significantly increase liquidity from institutional investors, and would likely provide buoyancy to the entire industry, even smaller operators.”

Photo: Benzinga; Source: Pixabay