A congressional hearing on banking for cannabis companies on Wednesday heard arguments from bank executives and legislators in favor of access to banks for the legal industry to reduce crime risk and other challenges that are stymieing its progress.
Experts highlighted crimes such as the 2016 killing of a Colorado pot dispensary’s security guard during a botched robbery, as MarketWatch’s Victor Reklaitis reported. The hearing also heard that people in the cannabis industry can’t build credit when they are forced to operate mostly in cash and that taxes cannot be collected properly.
A draft bill aiming to change that drew criticism from Jonathan Talcott, chairman of anti-legalization nonprofit Smart Approaches to Marijuana, and Missouri Republican Rep. Blaine Luetkemeyer, the subcommittee’s ranking member.
“You really need to address the Controlled Substances Act and its prohibition on marijuana … before any of the proposed changes and safe harbors would be effective,” Talcott said in his testimony. Luetkemeyer made a similar point, saying lawmakers were “dealing with an illegal industry at the federal level” and “putting the cart before the horse” by focusing on the industry’s banking needs.
Separately, lawmakers filed bills that would legalize medical cannabis for military veterans. If that bill is passed, it would allow Department of Veterans Affairs doctors to prescribe weed as well as to study its effects on veterans suffering from pain and its efficacy in reducing opioid abuse.
Among individual stocks, California-based Flow Kana, which distributes sun-grown cannabis products and supply chain services, said it has raised $125 million in a new funding round led by Gotham Green Partners, which led its Series A raise last May. Flow Kana has raised a total of $175 million to date which it will use to expand the he California cannabis supply chain focusing on small, decentralized, sustainably operated cannabis farms. The company says it is California’s top selling flower brand.
Valens GroWorks Corp. shares VGWCF, -1.49% jumped 3.6%, after the company said it has expanded its annual extraction capacity to 240,000 kilograms, making it the largest third-party extraction company in Canada.
“With edibles and concentrates becoming available later this year in Canada, we must be ready for a shift in consumer demand and in turn be flexible and scalable in our offerings for our clients to meet that demand,” Chief Executive Tyler Robson said in a statement.
Canopy Growth CGC, -1.76% WEED, -1.70% shares fell 2% ahead of the release of fiscal second-quarter earnings, expected to show how well the company fared in the first months of Canadian legalization. Benchmark analyst Mike Hickey is expecting the company to post sales of C$236 million ($178.5 million), below the company’s own guidance of C$284 million.
“We are cautious over near term supply limitations and nascent retail infrastructure (that) could challenge prior view,” Hickey wrote in a note. The analyst rates the stock a buy and has a C$100 share-price target, which is about 122% above the stock’s current trading level.
Aurora Cannabis Inc. ACB, -2.64% ACB, -1.83% shares were down 2.6%. That company reported its latest quarterly sales on Monday, nearly quadrupling revenue but also showing large losses and a shrinking margin.
The ETFMG Alternative Harvest ETF MJ, -0.80% was down 0.3%, but the Horizons Marijuana Life Sciences ETF HMMJ, -0.73% was up 0.2%. The S&P 500SPX, -0.31% and the Dow Jones Industrial Average DJIA, -0.45% were both down about 0.3%.
The ETFMG Alternative Harvest ETF (MJ) was trading at $34.65 per share on Thursday morning, down $0.28 (-0.80%). Year-to-date, MJ has gained 6.54%, versus a 2.94% rise in the benchmark S&P 500 index during the same period.
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