While Congress is expected to lift the federal prohibition on cannabis some day, Capitol Hill remains too occupied with other matters in the current fall session to take up the issue, marijuana business watchers said this week.
Questions around coming catalysts for the cannabis sector from Washington, D.C., have been frequent in recent conversations with investors, but with other items such as infrastructure, healthcare, and potential tax hike under debate, it’s unlikely lawmakers will act on any federal measures in the near future.
“Prospects for action on bills regarding federal cannabis to be passed in the fall seem to have waned,” Alliance Global Partners analyst Aaron Grey said Wednesday in a research note.
The next six months may still provide a window for some action in early 2022 before attention shifts to midterm elections later next year, Grey said.
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The extra time it takes for Congress to act will help ancillary cannabis companies such as Greenlane Holdings Inc. GNLN, +3.80% and GrowGeneration GRWG, -0.07% increase their market share ahead of increased competition that would follow federal legalization, he said. Grey rates both stocks a buy and said the valuations of multistate operators have been more favorable in recent months.
In terms of potential legislation, three camps have emerged in Congress.
Some Democrats want a more comprehensive solution such as the Cannabis Administration and Opportunity Act, penned by Democrat Senators Cory Booker, Ron Wyden and Chuck Schumer. The bill would seek to correct the damage caused by the War on Drugs in minority communities and address other social impact issues.
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