SAFE Banking Act is Good News for U.S. but Might Be Bad for Canada
The Secure and Fair Enforcement Banking Act gained serious traction in recent months, recently passing by an overwhelming majority in the House. Although it faces a bit of an uphill battle in the Senate, the Act is far from dead.
But while the SAFE Banking Act could be a huge boon for dispensaries in legal states, The Financial Post warns of potential negative effects on the Canadian marijuana industry.
Furthermore, many major banks on both sides of the border are not as excited about the new law as their prospective customers.
“A Potential Blow”
Being the only North American country to have a fully-established, federally legal marijuana industry, Canada enjoys a major advantage in the global cannabis market. But the SAFE Banking Act means cannabis stocks can finally trade publicly, which threatens to poach many Canadian investors.
The Financial Post explains:
“The advancement of the SAFE Banking Act indicates it won’t be long before U.S. stock exchanges open up to cannabis listings, a potential blow to Canadian bourses that have carved a lucrative niche for pot…Many American pot companies have expressed interest in moving to the New York Stock Exchange or Nasdaq when they can, and will likely prefer to work with the big U.S. banks as well.”
This has the potential to syphon a lot of investment to the U.S. Given the fact that Canada’s marijuana industry has – for the most part – reported underwhelming sales, some investors who were burned may try their luck elsewhere.
Many banks look forward to the passage of the SAFE Banking Act, while others are wary. Kevin Murphy, CEO of Acreage Holdings, says:
“I do think that a number of larger banks are going to embrace the cannabis industry, given the momentum in the space and the fact that they now have cover. SAFE is a tremendous step in the right direction, and that is critical to more steps in that direction.”
But not every bank is keen to jump on the cannabis train. According to The Financial Post, banks like JPMorgan Chase & Co., PNC Financial Services Group Inc., Bank of America and Toronto Dominion do not plant to deal with the cannabis industry. They say the SAFE Banking Act will not change their stance.
The SAFE Banking Act may be the catalyst for Canada’s potential looming crisis, the fault lies squarely on Canada’s current framework.
The initial failure of the rollout put a bad taste in the mouths of marijuana users. Many of them simply went back to the black market and stayed there.
Taxes and regulatory costs drive up prices, making legal cannabis even less interesting for those looking to save money.
Limitations on marketing and packaging make it impossible for the industry to establish any kind of brand recognition, while companies in the U.S. allow for artistic packaging and even celebrity endorsement.
Until Canada realizes that education, not bland packaging, is the best way to curb youth consumption and protect public health, the U.S. will gobble up investors as Canada limps along.
WeedAdvisor’s Desire for a Successful Cannabis Market
As advocates for legalization, we want to see the marijuana industry thrive worldwide. It is unfortunate that so many major institutions still will not engage with marijuana retailers, but this really comes as no surprise.
However, the impact on Canada’s economy could be significant. At this point, we hope Canada will make some alterations to its industry in order to soften or prevent the blow that a more open cannabis industry in the U.S. will inevitably cause.
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