Schumer Halts SAFE Act — What It Means for Cannabis Stocks

Date:

In the latest The latest information on the marijuana market, I will discuss:

  1. Where is the legalization of cannabis and how stocks worked.
  2. A recent failed special purpose cannabis company (SPAC).

Watch the video below.

Cannabis legalization and safety legislation

Anyone who has followed the move to legalize cannabis in Congress must be feeling whiplash.

Meanwhile, the House of Representatives has already approved the Safe and Fair Enforcement Bank (SAFE) Act five times. They added it to the defense bill and sent it to the Senate two weeks ago.

The law withdraws the penalties that banks incur by working with cannabis companies. It opens a traditional corporate bank in cannabis costumes.

Now it is already hitting a disability in the Senate. The majority of New Yorker’s Chuck Schumer leaders said the Chamber of Commerce had agreed to suspend action on the SAFE Act until the cannabis reforms became more powerful.

NS Stronger cannabis reform, He means more than just legalization. Schumer is considering reforming social justice. For example, erase a previous cannabis-related conviction.

Therefore, the Senate agreed to retain the SAFE Act until the cannabis social justice reforms materialized.

Schumer suggested in a podcast that the addition of these social justice measures could advance safety legislation.

Welcome to Potomac 2 Steps in Washington Politics.

I wanted to know how this latest development affected cannabis inventories.

So I started with Money & Market Cannabis Index — An evenly weighted index for cannabis companies with a market capitalization of $ 10 million or more.

As you can see, the index rose significantly in February, but was on a downward trend through September. It is still up about 80% from January 1st.

I also wanted to see a shorter time frame.

So I looked at the index performance over the last three months.

SAFE Act MAM Cannabis Index 3 Months

Here you can get a clearer picture of how cannabis strains suffered in the mid and late summer.

Overall, the index fell by about 14% as the industry faced headwinds.

What if we tracked closer to the cannabis stocks that are more closely related to the news from Washington?

SAFE ActMAM Cannabis Index 1 month

We can see that cannabis stocks began to rise when the House of Representatives enforced the National Defense Authorization Act.

The index has risen about 1.43% since last month.

remove: This tells me that the industry is hungry for small catalysts to boost inventories.

The “good news” headline related to legalization could boost cannabis inventories by 7% to 8% in a matter of days.

If the Senate can somehow move the SAFE method forward, I think the cannabis market will be strong. If they mix legalization or decriminalization, it will be much more powerful.

Cannabis SPAC merger fails

Something else caught my attention in the news: a potential SPAC merger of cannabis that was discontinued.

last week, Marijuana Business Daily (MJ Biz) report The $ 1.9 billion merger between Parallel and Ceres Acquisition Corporation, run by chewing tobacco heir William Wrigley Jr., has been cancelled.

The reverse merger will result in public parallel transactions on the Canadian NEO exchange.

In February, Parallel, which operates as Surterra Wellness in the United States, announced plans to expand from 42 retail stores in the United States to 86 stores in five markets within the next two years.

Another report from Reuters suggested that potential investors were not confident in parallel to meet their high financial forecasts, so the deal with Ceres was suspended.

According to MJ Biz, Parallel forecasts $ 447 million in revenue in 2021, but investors have calmed down on the idea that it is possible.

Investor concerns seem to be justified, as Parallel posted a net loss of $ 263 million in 2019 and $ 140 million in 2020.

For now, Parallel remains a privately held company, but Ceres will either have to trade until March 2022 or shareholders will need to extend that date.

It is important to point out that this is not the only SPAC transaction in the cannabis sector.

Multistate Operator (MSO) Verano Holdings will be open to the public on the Canadian Stock Exchange. Value of $ 2.8 billion Through the reverse acquisition announced in December 2020.

Cannabis advertising company Weedmaps will also be published through the SPAC Silver Spike Acquisition Corp. With a potential valuation of $ 1.5 billion..

SPAC trading chart

SPAC was popular in 2020, with 248 SPAC initial public offerings (IPOs) bringing total revenues to $ 83.3 billion. Even higher this year, 450 SPAC IPOs generated a total revenue of $ 129.3 billion.

However, the market tightened after the announcement of 109 SPAC transactions in March alone. In April, the Securities and Exchange Commission released guidance on classifying SPAC warrants as liabilities rather than equities.

according to CNBC SPAC Post Deal IndexAll profits in 2021 were wiped out and the index fell by more than 20% from January to April.

remove: This does not mean that the cannabis space SPAC is dead, but it does suggest that investors will take a closer look at the companies that the SPAC is proposing to merge.

When the numbers are not summed, as in parallel Investor Seems happy to leave.

Where to find us

This week I’ll go into more detail Bull & Bear It’s a podcast, so stay tuned.

Subscribe to youtube

And check us out Ask Adam anything In the video series, Chief Investment Strategist Adam Odel and ours Investing with Charles In the series, expert Charles Sizemore and I will discuss the trends you have written.

Also you can follow me Twitter (@InvestWithMattC), Offers more insights into the cannabis market as well.

Remember, you can email me with my team Feedback @ moneyandmarkets.com — Or leave a comment on YouTube. We love to hear from you!

Safe transaction,

Clark_Sig

Matt Clark, CMSA®
Survey analyst, Money & Market

Matt Clark is a research analyst Money & Market.. He is a Certified Capital Markets & Securities Analyst at the Corporate Finance Institute and In search of alpha..Before joining Money & Market, He has been a journalist and editor for 25 years, responsible for college sports, business and politics.

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