Cannabis stock gains fade in volatile trading on US Senate bill hopes (updated)

Curaleaf Holdings

27/09/2023 21:23

(Updates with closing prices in paragraphs 3-4, adds Curaleaf
founder comments in paragraphs 11-12)
    By Chibuike Oguh and Bansari Mayur Kamdar
       NEW YORK, Sept 27 (Reuters) - Shares of marijuana
companies gave back early gains on Wednesday after jumping
following a U.S. Senate committee voted to advance a bill that
would give legal cannabis-related companies a boost by allowing
them to access banking system services. 
    A bipartisan group of senators on the U.S. Senate Banking
Committee voted to advance the Secure and Fair Enforcement
Regulation Banking Act, also known as the SAFER Banking Act,
which aims to protect banks offering financial services to legal
marijuana companies. The bill now heads to the Senate floor.
    In volatile trading, the U.S.-listed shares of several
cannabis firms rose immediately after the Senate vote. But most
later reversed course and closed lower.
    Canopy Growth  WEED.TO  dropped 4%, Aurora Cannabis  ACB.TO 
fell 4.7%, Cronos Group  CRON.TO  declined 1.9%, and SNDL Inc
 SNDL.O  shed 1%. Curaleaf Holdings Inc  CURA.CD  closed up 
3.7%, while Tilray Brands  TLRY.O  finished flat.
    Some cannabis-linked exchange-traded funds (ETFs) also pared
earlier session gains. The AdvisorShares Pure US Cannabis ETF
 MSOS.P  fell 0.6%, while the Roundhill Cannabis ETF  WEED.Z 
gained 2.6%.
    "The vote today is a positive first step in a longer
process," said Jesse Redmond, head of cannabis sector at Water
Tower Research.
    "Today's news was largely priced in. Investors expected it
to exit the banking committee. I expect bigger moves after we
pass the harder hurdles," Redmond added.
    An earlier version of the bill, the SAFE Banking Act, had
failed to secure a Senate vote despite being passed seven times
by the U.S House of Representatives.
    Although recreational or medical marijuana use has been
legalized in about 40 states across the U.S., the substance
remains prohibited under federal law. As a result, legal
cannabis companies are denied access to financial services.
    That has severely limited access to financing and lending
and forced the companies to resort to primarily using cash for
transactions, which in turn has made them targets of violent
crime.
   "We've worked very hard on this and it's been four years of
heavy lifting. To get it through the Senate banking committee is
a major achievement," Boris Jordan, billionaire founder of
Curaleaf Holdings, said in an interview.
   If Congress passes the law, "banks will be allowed to service
companies doing business legally in state jurisdictions, and it
is likely to also allow for credit card usage," Jordan added.

 (Reporting by Chibuike Oguh in New York and Bansari Mayur
Kamdar in Bengaluru; Additional reporting by Suzanne McGee;
Editing by Michelle Price, Lance Tupper and Bill Berkrot)
 ((Chibuike.Oguh@thomsonreuters.com; +332-219-1834; Reuters
Messaging: chibuike.oguh.thomsonreuters.com@reuters.net))