US Majority Leader Chuck Schumer is urging people to endorse SAFER Banking Act by signing petition
Act aims to enhance access to traditional financial services for cannabis companies in the US
Melodiol Global Health could benefit as one of the only ASX-listed companies with North American cannabis operations
Special Report: Investor interest in the North American cannabis sector is surging as the US Congress moves closer to passing key legislation that could benefit ASX-listed operator Melodiol Global Health (ASX:ME1) .
US Senate Majority Leader Chuck Schumer is urging people to express their endorsement of the Secure and Fair Enforcement Regulation or SAFER Banking Act by signing a petition.
Presently most financial institutions, including almost all major banks, hesitate to do business with cannabis and cannabis-related businesses due to the federal illegality of the plant.
The bipartisan-supported SAFER Banking Act should enhance access to traditional financial services by establishing broader and less burdensome safe-harbour protections, including shielding financial institutions, lenders, insurers, and others supporting the cannabis industry from certain criminal, civil, and administrative penalties.
According to an article from the American Bar Association “the SAFER Banking Act not only addresses banking and insurance but also extends protections to mortgage lending, payment processing, and more, aiming to normalise financial transactions for cannabis businesses and potentially stimulate significant industry growth”.
States have strongly backed marijuana for medical use with 38 of America’s 50 State jurisdictions and Washington DC approving the practice. But it remains illegal at the federal level.
Schumer continues to push for comprehensive federal cannabis legalisation and, in the petition, says it’s important for cannabis businesses to be able to operate legitimately.
While the SAFER Banking Act has bipartisan support, it still must reach consensus in the Senate and the bill must move through a Republican-controlled House.
Renewed investor interest
North American cannabis stocks have rallied since Schumer’s petition went public.
One of the world’s largest cannabis companies – Canopy Growth Corporation (TSE:WEED) – is up ~240% in the past month.
While the rally hasn’t translated to the Aussie bourse yet, ME1 could stand to benefit as one of the only ASX-listed companies with North American cannabis operations via its 100%-owned subsidiary, Mernova Medicinal Inc.
Mernova has extensive operations in Canada, where cannabis is legalised for both medicinal and recreational use. Its established product suite of dried cannabis flower and pre-rolled joints are already sold in all major Canadian provinces.
In the first two months of FY24, ME1 generated unaudited group revenue of $3.1 million, with Mernova a strong contributor.
Lay says the company would look at US expansion after the SAFER Banking Act is passed.
“The US is the largest cannabis market in the world and we continue to monitor potential changes in regulation very closely,” he added.
“The company applauds the recent efforts of Mr Schumer, which highlight another step forward in delivering legislation which could unlock sweeping changes for the industry and invigorate significant growth across the industry.
“As the potential for regulatory changes looms, we have continued to develop best practices at our 100%-owned recreational cannabis operation, which already generates significant revenue for the company.”
This article was developed in collaboration with Melodiol Global Health, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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