Cannabis Stocks to Benefit from Impending USA Legislation


Cannabis investors have faced significant disappointment over the past year, with various well-known factors contributing to this downturn. However, recent market rallies in major cannabis stocks and juniors have shown improved prices and volumes not seen in quite some time. The charts for Aurora Cannabis (NASDAQ: ACB) and Canopy Growth (NASDAQ: CGC) illustrate this trend, as both stocks serve as key indicators for the sector.

The recent price and volume increases are not driven by product consumption but by investors betting on impending cannabis regulations. While less than half of U.S. states allow citizen-initiated ballot measures, most states require legislative action to reform cannabis laws. Despite over two-thirds of Americans supporting legal cannabis use and around 90% backing medical cannabis, lawmakers have been slow to respond.

U.S. Senate Majority Leader Chuck Schumer recently stated, “We have worked hard to get a common-sense agreement that allows legal cannabis businesses across America access to financial services while protecting the capacity of federal regulators to stop bad actors. This legislation will improve public safety, protect small businesses, and finally achieve action on cannabis reform. I intend to bring this legislation to the floor with all due speed.” Schumer’s remarks came a day after Senate Banking Committee Chairman Sen. Sherrod Brown expressed hopes of advancing cannabis banking legislation within the next six weeks, as reported by Marijuana Moment.

President Biden also supports these proposals, which have sparked impressive rallies in cannabis stocks. While cannabis use remains illegal federally except for FDA-approved research programs, states have enacted various exemptions for medical, industrial, and recreational purposes.

One of the most significant potential legislative changes is reducing cannabis from a Schedule One drug to a Schedule Three, putting it on par with over-the-counter medications like Tylenol.

Another positive development for the cannabis industry is the SAFE (Simple Agreement for Future Equity) Act. A SAFE is an investment contract that gives investors the right to receive equity in a company under certain conditions, such as future equity financing. While these securities come with risks and differ from traditional common stock, the SAFE Act aims to protect banks providing services to cannabis businesses from penalties, prevent proceeds from cannabis companies from being subject to money laundering laws, and enable loans and financial services for cannabis businesses.

The bipartisan Secure and Fair Enforcement Banking Act, designed to address the predominantly cash-based nature of the cannabis industry, is scheduled for a committee vote on September 27.

Pending regulations have already shown to be favorable for cannabis stocks, as evidenced by recent market performance. The chart for the POTX (Global X Cannabis ETF) on the NASDAQ highlights this positive trend.

A compelling junior story in the cannabis sector is Nevis Brands. This unique company produces cannabis-infused drinks and recently expanded its popular product, Major™, into its sixth state.

According to Straits Research, the global CBD-based beverages market was valued at USD 4.52 billion in 2022 and is expected to grow at a CAGR of 25.6% from 2023 to 2031. The properties of CBD are attracting previously skeptical consumers, creating numerous opportunities in the North American market.

Nevis Brands offers some of the top cannabis beverages in the U.S. and globally through its Major™ brand. The company’s proprietary water-soluble emulsion technology, SōRSE, enhances the taste and provides an impressive onset time of 8-15 minutes, leading the industry.

Instead of rolling your own and dealing with the mess and potential lung issues, NEVIS offers a smooth, tasty beverage that takes effect in just 8-15 minutes.

With the sector showing signs of recovery, investing in a quality junior like NEVIS could prove both a strategic proxy and a profitable move.

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