US cannabis stocks have rebounded this week as the industry got the opportunity to air their frustrations over a lack of access to banking to the Senate.
Yesterday, the Committee on Banking, Housing and Urban Affairs met in an open session to discuss the ‘real impacts of debanking in America.’
A lack of access to banking has long been a major obstacle for cannabis businesses across the country, with the long-running SAFER Banking Act still struggling to be passed after nearly a decade of effort.
The debanking of cannabis, which endangers physical stores forced to stockpile cash, limits access to capital and institutional investment, and causes a myriad of other issues for operators, was highlighted by a number of participants on both sides of the political spectrum.
Lawmakers from both parties, alongside financial industry experts, highlighted the difficulties cannabis businesses face in securing banking services, despite operating legally under state laws.
During the hearing, Sen. Elizabeth Warren (D-MA) urged further investigation into the issue, arguing that it ‘shouldn’t be happening’.
Other senators, including Jack Reed (D-RI) and Thom Tillis (R-NC), acknowledged the regulatory gap between state and federal law, with Tillis suggesting that broader federal cannabis reform may be necessary to resolve the banking dilemma.
The discussion also focused on the significant compliance costs faced by banks, with Aaron Klein, a senior fellow at the Brookings Institution, noting that suspicious activity reports (SARs) filed by financial institutions surged to 2.5 million in 2023, making it financially unviable for many banks to service cannabis businesses.
While the SAFER Banking Act, which would provide legal protections for financial institutions working with cannabis businesses, has been stalled in Congress for years, Klein suggested that the bill alone may not be enough to solve the problem.
He recommended pairing it with broader SAR reform to reduce compliance burdens for banks. Financial institutions, including JPMorgan Chase, have indicated they would be open to working with cannabis businesses if federal regulations allowed it, while industry advocates continue to push for solutions that would end the reliance of many cannabis operators on cash-only transactions, which increase risks of theft, fraud, and money laundering concerns.
US cannabis stocks saw significant gains in apparent reaction to the hearing, with Cresco Labs Inc. (+14.2%), Curaleaf Holdings Inc. (+10.7%), and Trulieve Cannabis Corp. (+2%) all climbing higher.
Meanwhile, cannabis ETFs moved in tandem with the broader market rally, as the Amplify Seymour Cannabis ETF (CNBS) rose 4.3% and the AdvisorShares Pure U.S. Cannabis ETF (MSOS) gained 3.9%.
As reported earlier today, Aurora Cannabis was a standout performer on the stockmarket today, largely due to its record breaking Q3 results, rising 40%.
Aurora’s rally provided a positive spillover effect for other Canadian cannabis stocks, including Canopy Growth Corp. (+22.2%), Tilray Brands Inc. (+7%), and Cronos Group Inc. (+10.1%).
