Harris’s promise could remove regulatory hurdles currently dampening new advancements in the cannabis industry.
During the vice presidential debate on Wednesday, Kamala Harris delivered the biggest promise on cannabis reform ever to be made on such a national stage — that the Biden-Harris administration would decriminalize marijuana. The next day, a broad array of U.S.-listed shares of cannabis companies boosted upwards.
“We will decriminalize marijuana and we will expunge the records of those who have been convicted of marijuana,” she said.
Cannabis ETFs THCX and MJ.P rose 7.4% and 5.5%, respectively. Big name companies like Aurora Cannabis, Canopy Growth, and Aphria, Inc. climbed between 10% and 13%, after Harris’s statement. Tilray had the biggest climb, as shares of the stock increased 18.3%.
Although decriminalization and expungement primarily offer a huge advancement towards criminal justice, Harris’s promise could also remove regulatory hurdles currently dampening new advancements in the cannabis industry. Banks and other financial institutions still won’t work with cannabis companies, due to marijuana’s Schedule I status.
These institutions fear federal prosecution, even in legal marijuana states. Democratic lawmakers have tried to pass the Secure And Fair Enforcement (SAFE) Banking Act, which would provide banks legal protection to work with the legal cannabis industry. The bill passed the House with a majority bipartisan vote, but has languished in the Republican-controlled Senate with no action.
“Access to safe banking will transform the industry, freeing up capital markets for investment and reducing the risk of operating a cannabis business,” Keith Cich, co-founder of cannabis-related products manufacturer Sunderstorm Inc., told Reuters.
Democrats have attached the SAFE Banking Act to the latest coronavirus stimulus package as a provision, but the Trump administration has largely condemned the move. These regulatory hurdles also ban cannabis companies from using the tax credits and other incentives many other businesses enjoy. A cash crunch has hit the industry during the pandemic and decriminalization could provide money flow in ways both obvious and not.
“From a business perspective, [decriminalization] will level the playing field by allowing companies to expense normal operational costs instead of being taxed on gross profit,” Sam Armenia, vice president at producer C21 Investments Inc CXXI.CD, told Reuters.
Although Harris has a complicated history with marijuana, she has since become a fierce advocate of marijuana reform. She is the lead sponsor on the Marijuana, Opportunity, Reinvestment, and Expungement (MORE) Act, which would end federal cannabis prohibition. She also put her voice behind allowing cannabis companies access to coronavirus-related stimulus funding and improving access for marijuana research.