Cannabis stocks were climbing Wednesday as investors hope that if Democrats win control of the Senate the federal government will ultimately decriminalize use.
Democrat Raphael Warnock's victory over Kelly Loeffler in the Georgia Senate runoff, which brought the Democrats closer to a majority in the U.S. Senate, raised hopes of cannabis reform.
Warnock's Democratic colleague, Jon Ossoff, at last check held a narrow lead over the GOP's David Perdue.
President-elect Joe Biden stated during the campaign that his administration would pursue cannabis decriminalization and seek expungements for people with cannabis-related convictions. Democrats more broadly are also expected to support reforming cannabis laws.
A report last year by the American Bar Association said that marijuana-related businesses are in "a state of legal limbo" regarding banking regulations.
Many marijuana-related companies have difficulty finding banks willing to offer financial services to them, the ABA said.
That's because while the majority of U.S. states have legalized pot for either medical or so-called adult recreational use, federal law describes marijuana as a controlled substance.
Democratic control of Senate committees will make federal cannabis-reform proposals – including, but not limited to the Safe Banking Act, the States Act and the More Act – more likely to get out of committee and on to the Senate floor.
There, such legislation may pass in the same way that it has in the House of Representatives, according to an article by the Bradley law firm.
Cowen analyst Jaret Seiberg said in a note that he expected Congress to “give cannabis companies access to commercial banking and insurance. We also see medical cannabis being protected. Capital-markets access is largely dependent upon enactment of either the States Act or the More Act.”
The States Act lets each state decide whether to legalize pot. The More Act removes cannabis from the federal list of controlled substances.
Meanwhile, New York lawmakers representing nearly a third of the State Senate on Tuesday prefiled a bill to legalize marijuana.