Congress Is Working on Weed
Big news from Washington this week…
The first hearing on marijuana from the new Congress is already in the books. Next week, the House Financial Services Committee will hear from legal cannabis companies about the trouble they have operating within the confines of the banking system while pot remains federally illegal.
This is an important hearing because access to financial products is key to seeing legal U.S. cannabis businesses mature.
Right now American cannabis companies are primarily cash businesses because of the federal prohibitions on pot. Financial institutions can’t do business with companies that are breaking federal drug laws.
That comes at a huge cost.
Walk into a dispensary and you’ll be met by the friendly smiles of heavily armed private security.
Large operations need to spring for vaults to hold all that cash or contract with a cash holding company. They also need to spring for armored truck companies to transport the loot and for armed guards to protect it.
Not being able to have bank accounts creates all sorts of other problems for companies trying to stay compliant with state and federal employment laws. Even something as trivial as payroll becomes a logistical nightmare.
There have been cases of couriers being attacked and robbed leaving cannabis businesses because criminals know that they may be carrying large amounts of cash.
I told you a while back that some banks were trying to change that. Maryland-based Severn Savings Bank got approval from the Federal Reserve to provide banking services to cannabis companies… but that came with strings attached.
Account holders have to pay big fees and can’t write checks or get loans.
Opening up the banking system to legal cannabis companies will boost profitability and open up new sources of capital.
Rumor has it that next week’s hearings are a precursor to a planned vote on an actual marijuana banking bill in the next couple of months.
In turn, that could be the first step toward full-blown federal legalization…
2019 could be a transformational year for marijuana laws in the U.S. — and that means that it could also be a transformational year for the gain potential of tiny pot stocks.
I’ll keep you posted as things continue to develop!
For Technology Profits Daily,
Chief Technology Expert, Technology Profits Daily