Cantor Fitzgerald analyst Pablo Zuanic doubts that the Cannabis Administration And Opportunity Act (CAOA) will get the 60 votes it needs in the Senate in order to pass due to Republican opposition.
The CAOA, which has been finally introduced, would decriminalize and deschedule cannabis on the federal level as well as promote social equity. The nearly 300-page bill was unveiled on Thursday, a year following the introduction of its outline.
It was sponsored by Democrats, namely Senate Majority Leader Chuck Schumer, and Senators Ron Wyden and Cory Booker.
“It would be a watershed (read bullish) event for US cannabis stocks,” Zuanic said in a recent note regarding the possible outcome of the Congress’ vote.
If it takes effect, the bill would remove marijuana and tetrahydrocannabinol in cannabis from the Controlled Substance Act — a “Holy Grail” scenario, Zuanic said. That would effectively legalize marijuana and make the “US industry bankable,” resulting in uplisting for the US cannabis stocks. Following the law enactment, the Attorney General would have 180 days to complete the rules.
The analyst said that the “revised bill seems to pass the buck on de-scheduling to the [Department of Justice].”
However, it also urges FinCEN to permit banks to do business with licensed marijuana businesses, which in combination with de-scheduling would be “enough for US exchanges.”
Besides decriminalization, which would only make it easier for illicit trade to operate according to the analyst, the legislation seeks to expunge the records of individuals with low-level, federal cannabis convictions.
Meanwhile, the bill was presented ahead of the Senate Judiciary Subcommittee on Crime and Terrorism’s meeting, hosted by Booker and scheduled for July 26, with the title “Decriminalizing Cannabis at the Federal Level: Necessary Steps to Address Past Harms.”
Zuanic said that Booker’s move is not “coincidental.”
Finally, the legislation would also establish a federal regulatory framework for the cannabis industry with the Food and Drug Administration (FDA), the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and the Alcohol and Tobacco Tax and Trade Bureau (TTB) having the most important roles.
”We think the revised CAOA is bullish for cannabis stocks (all else equal), especially in the context of depressed valuations, the recent rally notwithstanding” Zuanic said. “At this stage, we would not rule out any scenarios and think investment risks are to the upside.”
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