Monday was a relatively bad day for cannabis stock across the board. Shares of major cannabis stocks ended up falling as investors braced themselves for a major Senate hearing scheduled on Tuesday that would focus on cannabis and banking, an area which has long been a hurdle for the industry.
With many dispensaries going so far as to accept cryptocurrencies (or even create their own altcoins), the issue of banking is a sensitive topic for many cannabis companies which have been hurt in the past by federal legislations.
Cannabis stocks prep for Senate panel hearing
A U.S. Senate panel will have a hearing that will include testimonies from the backers of the Secure and Fair Enforcement (SAFE) Banking Act, which is one of the two main proposals that would help protect banks that serve companies cannabis that are operating in legal states.
The second of these bills, called the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, would give significant leeway to individual states on determining their rules regarding cannabis companies as well as banking rules as well.
While the panel in question isn’t expected to focus on any specific bill, it will hear from a number of representatives in the banking sector that will help provide clarity on the practicality and effectiveness of these bills.
However, cannabis insiders are mostly worried about Senate Majority Leader Mitch McConnell, who is among the most anti-cannabis figures in the Senate at the moment.
“With more states legalizing cannabis for recreational use (11 states and D.C.) and medical use (33 states), the schism between states’ laws and federal policy is creating pain in local communities,” said the Credit Union National Association (CUNA) in emailed comments. The association went on to say that they feel that the federal cannabis ban “creates myriad financial and safety issues for sellers and growers, as well as the small businesses who serve them. In short, everyday people are being caught in the middle of the federal-state tug of war over the cannabis issue.”
With the cannabis market in jittery anticipation over the hearing, cannabis stocks on the whole edged down on Monday. The biggest loser in the market over the past couple of weeks has been CannTrust Holdings (NYSE: CTST), whose shares have fallen over 40 percent since it first announced that Health Canada had seized weed it had been producing illegally without proper regulations.
After finding that the company had shipped this unregulated weed internationally, this has opened up the potential for a serious criminal investigation as well as possible jail sentences for the key executives who knew about this. CannTrust issued a press release today where it announced an update on their special committee investigation which had been started in response to the Health Canada seizures.
Aside from all of this, the biggest loss in the cannabis sector came from the U.S.-listed Flowr (NASDAQ: FLWR), whose shares tumbled 17 percent and were halted for the announcement of a $43.5 million capital raise.
CannTrust Company Profile
CannTrust Holdings Inc is engaged in the business of producing and distributing medical cannabis in Canada. Its facility is located at Vaughan, Ontario in Canada. Its brands include LIIV, ESCAPE, SYNR.G and Peak Leaf. – Warrior Trading News