For a variety of reasons, institutions are unable to invest in cannabis stocks. Jefferies analyst Owen Bennet outlines why this is the case and the implications of any future federal legalization: “1) Some institutions can't invest in US names as not on a major exchange; 2) Even if the exchange is not a factor, other institutions can't invest in US names as clearing houses won't settle the trades (could be prosecuted for money laundering); 3) Even if 1) or 2) were not an issue, others still won't due to being federally illegal and concerns over reputation//prosecution themselves. Any of the MFO, MORE or STATES Act would likely result in allowing US names to list on a major exchange, clearing houses would settle trades, investment bank/capital market support would open up, funds would be able to invest without fears of prosecution, and Canadian names could enter US THC.”
Dominoes are starting to fall following New Jersey’s cannabis legalization this past November. New York Governor Andrew Cuomo tweeted that he is "announcing a proposal to legalize cannabis and create an equitable adult-use cannabis program in NYS." Click the link above to read the full tweet.
“We go from speculating what President-elect Biden could have done for cannabis reform via Executive Order (or by directives/’memos’ from his incoming Attorney General) and if the Senate would have held a vote on the SAFE act (banking reform) would have even taken a vote, to a new world, in which the question is more about the timing and scope of much broader reform for the cannabis industry,” said Cantor Fitzgerald analyst Pablo Zuanic.