Mar 31, 2022
Later this week, the United States (US) House of Representatives are expected to vote to legalize cannabis and we believe that a positive outcome could be the biggest potential catalyst for the sector.
Before the legislation is voted on by the House of Representatives, a House Rules Committee will meet to decide whether any proposed amendments can be made to it. The bill was prepared by the House Judiciary Committee and is sponsored by Representative Jerrold Nadler (Democrat-New York).
This will be the second time that legislation to end federal prohibition of cannabis will be voted on and we hope to see a better outcomes than the first time the subject was voted on in 2020. When the legislation was first voted on, it was passed by the House of Representatives but was not voted on in the Senate.
We believe the legislation is comprehensive and we consider the following subjects to be some of the most important parts of it:
The legislation would de-schedule cannabis by removing it from the list of federally banned drugs under the Controlled Substances Act (CSA)
Cannabis products would be subject to a federal excise tax, starting at 5% for the first two years and 8% by the fifth year of implementation.
Half of the tax revenue from the sale of cannabis would support a Community Reinvestment Grant Program, 40% would go to the federal Small Business Administration (SBA) to support a equitable licensing grant program, and 10% would support substance misuse treatment programs
People would not be denied federal public benefits for only using or possessing cannabis and the legislation creates a process for expungements of non-violent federal cannabis convictions
Cannabis producers and importers would need to obtain a federal permit and would be subject to a $1,000 per year federal tax for each premise they operate
The bill would impose certain packaging and labeling requirements on cannabis products
The legislation includes penalties for unlawful conduct such as illegal, unlicensed production or importation of cannabis products.
Sector Weakness Creates Opportunity
During the last year, the cannabis sector has been under considerable pressure and we partly attribute the weakness to a lack of regulatory changes in the US. After Joe Biden was elected at president of the US, many analysts and executives expected cannabis legalization to be one of the first areas of focus.
We believe the COVID pandemic and major geopolitical problems (Russia and Ukraine) are more significant topics and have delayed the cannabis legalization process in the US. We remain bullish on the US cannabis industry and believe that it is only a matter of time until we see changes at the federal level.
Although the recent weakness is concerning, the cannabis market continues to grow rapidly and company fundamentals have significantly improved. We believe the recent weakness has created a great opportunity and will monitor how the sector continues to perform.
https://technical420.com/cannabis-article/will-the-impending-u-s-cannabis-legislation-set-the-sector-on-fire-if-it-passes/#
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