Progressive Democrats led by Senate Majority Leader Chuck Schumer (D., N.Y.), Sen. Ron Wyden (D., Oreg.) and Sen. Cory Booker (D., N.J.) finally unveiled their draft legislation to end the federal prohibition of marijuana on Wednesday, but cannabis stocks still sold off in the days that followed.
That could be because some see the proposal, which seeks to set an excise tax as high as 25% to redistribute some of that revenue to communities of color, as too progressive to garner the Republican support needed to pass in the Senate. Others in the business community have long awaited more moderate federal reforms like those laid out in the bipartisan SAFE Banking Act to allow companies to access traditional financial services.
Despite a near 8% drop in shares of Canadian cannabis giant Canopy Growth (CGC), which has a deal in place to enter the U.S. market as soon as the sale of cannabis becomes federally permissible, CEO David Klein called the draft introduction "really positive" in a Thursday interview with Yahoo Finance.
"For me, the bill just represents maybe the beginning or a new beginning of a legislative path to get it done," Klein said, adding that he'd be happy to see any incremental progress on federal reforms, whether its the SAFE Banking Act, or Schumer's more progressive Cannabis Administration and Opportunity Act.
"If you're going to start having the discussion around Safe Banking, the question that I have is why not try to go all the way? Why not try to fully legalize cannabis, create a federal structure for regulating cannabis and use some of the excise taxes that would be imposed from that federal program to reinvest in communities that have disproportionately been impacted by cannabis prohibition," he said.
It's possible the even split in the Senate makes the more moderate SAFE Banking Act a more likely first step forward at the federal level, but Booker staunchly opposed putting any pro-business reform ahead of righting past wrongs for those currently incarcerated due to cannabis offenses.
"I will lay myself down, do everything I can to stop an easy banking bill that’s going to allow all these corporations to make a lot more money off of this, as opposed to focusing on the restorative justice aspect," he told reporters Wednesday.
For Canopy and other Canadian peers looking to enter the much larger U.S. cannabis market, the clock is continuing to tick as U.S.-based businesses continue to broaden their lead. Canopy has had a deal in place for years to acquire U.S. multi-state operator Acreage Holdings (ACRHF) and its nearly 20 state licenses. It has also been investing in fellow multi-state operator TerrAscend (TRSSF) and building out its non-THC lines of brands in the U.S., including Martha Stewart's CBD line of products.
"I would argue [the wait for federal reform] it's not slowing us down all that much as we sit here today," he said.