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Major Cannabis Reform: The SAFE Banking Act

Major Cannabis Reform: The SAFE Banking Act

Story Highlights:

  • On Wednesday, the U.S. House of Representatives passed a bill that will allow banks to work with cannabis businesses.
  • Senate passage will be a bigger hurdle.
  • Your best bet is to buy strong pot stocks on the dip.

Marijuana stocks have plummeted in the past year.

The chart below shows the Horizons Marijuana Life Sciences Index fund’s (HMMJ.TO) performance in the past year.

It holds all the big names, including Aurora Cannabis, Cronos Group and Canopy Growth. It’s a good indicator of the broad sector’s performance.

 

Company scandals and black-market vaping are giving pot stocks a one-two punch.

But something just changed…

On Wednesday, the U.S. House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act.

And this could be the engine that sends cannabis stocks flying in the next year — if the government gets it right.

See, the bill allows banks to work with cannabis shops and related businesses.

And this is critical for expanding the cannabis sector. Late last year, Matt Badiali told me a story that proves why.

He told me he has a friend in Pennsylvania who owns a marijuana dispensary. Let’s call her Jill.

Jill told Matt there’s one bank in Pennsylvania — where medical cannabis is legal — that does business with cannabis shops. This was a $100 million business in the state last year!

Like Matt, I was shocked. One bank?!

To make a deposit, medical marijuana dispensaries had to load cash into a truck and take it to that one bank. (Pennsylvania is 283 miles long and 160 miles wide. That bank trip could be an all-day affair.)

By federal law, any bank that the Federal Deposit Insurance Corporation (FDIC) insures can’t work with businesses that deal in cannabis. Most banks are FDIC-insured.

It’s a huge obstacle standing in the way of the industry taking off.

However, the SAFE Banking Act will help businesses clear that hurdle — if the Senate passes it.

It’s not clear yet when the Senate will vote. It could happen by the end of the year.

Optimistic analysts think the bill could become law before the election in November 2020.

Others predict Senate Majority Leader Mitch McConnell will be a roadblock.

But House passage is an important first step.

A smart reader reached out to our cannabis stock expert, Anthony Planas, early this week to ask if there was a way to play it if the SAFE Banking Act passes.

Here’s what Anthony said:

I don’t think there are any specific plays for this. … It’s not like you’re going to be able to cherry-pick banks and say: “Oh, this one is going to benefit more than others.”

As far as cannabis companies, again, they’re all going to benefit. All the ones that are operating legally within the States can now work with these banks.

The recent House passage could give pot stocks a much-needed boost.

But as Anthony mentioned, the whole sector will benefit if the bill passes.

In the meantime, we need to act. All of our experts say it’s time to buy cannabis stocks. The recent dip is a great opportunity, no matter what happens in the Senate.

After all, the sector is set to rise 4,067% by as soon as 2021.

Matt and Anthony are targeting those types of stocks in Real Wealth Strategist at this very moment.

Two of their favorite cannabis stocks are strong buys in the portfolio right now — and they tell me they’re going to recommend another any day.

Get in today, and you’ll get their brand-new recommendation!

Check out 4 New YouTube Videos!

Be sure to watch our experts’ latest videos!

  • Pure Income Editor Chad Shoop: “How to Sell Put Options Like Warren Buffett.”

  • Pot stock guru Anthony Planas: “Vaping Crisis and the SAFE Banking Act.”

  • Apex Profit Alert Editor John Ross: “How to Trade Stock Market Rotation and Liquidity Crisis Like 2008.”

  • Alpha Investor Report Editor Charles Mizrahi: “WeWork’s Red Flags: Why a Great CEO Matters.”

Read on to see the topics all of our experts are following this week.

Good investing,

Kristen Barrett

Senior Managing Editor, Winning Investor Daily

***

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Vaping Crisis Causes Panic Sell-Off in Cannabis Sector

Vaping products are linked to a severe respiratory disease. About a third of legal cannabis use in the U.S. comes from vaping. Cannabis stocks are selling off because of proposed vaping bans. Health officials linked the illness to a chemical additive in black-market vaping products. Anthony Planas explains how the vaping crisis could lead to a win for legal cannabis. (3-minute read)

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