Cannabis stocks surged in trading Thursday as the House Rules Committee is expected to vote on the MORE Act on cannabis legalization as soon as Tuesday. The House vote is symbolic, as the debate will show how much House GOP support there is for cannabis. Cannabis legislation is not about the House, it is all about the Senate. No matter what happens in the House next week, it cannot force the Senate to act.
According to Jaret Seiberg from Cowen, the Senate won't take up the MORE Act as there are not the votes there to legalize cannabis. He anticipates nearly every Democrat to back the MORE Act, while Republicans decision is unclear, as the MORE Act includes social justice provisions that some Republicans may oppose.
Around the sector, Tilray, Inc. (NASDAQ:TLRY) gained 22%, Canopy Growth (NASDAQ:CGC) gained 11%, and Sundial Growers (NASDAQ:SNDL) gained 23%.
Seiberg said they are more interested in the debate than the actual vote, as it will show how many Republicans support legalization even if they object to the MORE Act, noting that there is a high probability that Republicans will control the House next year. Seiberg highlighted the possibility of the House going Republican but Democrats managing to keep control of the Senate, which would mean there would be a path for cannabis legislation next year.
Seiberg doesn't view this vote as impacting the future of the SAFE Act on cannabis banking, with House Democrats knowing the Senate wont legalize and viewing SAFE as the best opportunity to enact a cannabis bill. SAFE gets broader Senate GOP support as it is also framed as a public safety bill, which makes Seiberg believe SAFE remains likely to become law in this Congress. Regarding the question of it expanding to include capital markets access, Seiberg sees a window for such a deal though it may depend on macro threats like Russia and inflation to ease. Otherwise, Congress may be too distracted, which means a narrower SAFE Act is more probable.
By Davit Kirakosyan