Details of the Cannabis Administration and Opportunity Act (CAOA) draft bill, were released last Wednesday morning. Then, around the mid-day, the bill's sponsors, Senate Majority Leader Chuck Schumer (D-N.Y.) and Sens. Cory Booker (D-N.J.), and Ron Wyden (D-Ore.) held a press conference.
Unexpectedly, marijuana stocks fell on the big news and Cantor Fitzgerald’s Pablo Zuanic proposed a few possible reasons for this reaction.
The Bill Could Pass
After a more detailed analysis, Zuanic released another analyst note this Wednesday in which he said the Cannabis Administration and Opportunity Act (CAOA) could actually get the 60 Senate votes it needs for approval.
The analyst challenged the widespread belief that the “discussion draft” is 1) too comprehensive, 2) too ambitious, and 3) too radical.
“In fact, we are starting to think the draft may have more support than assumed,” Zuanic wrote. “We have all been very focused on Sen Schumer’s ‘we do not have the votes’ comment, or on Sen Booker’s ‘I will lay myself down...’ assertion (regarding marijuana banking reform in isolation). But the silence from others is intriguing to us.”
With the CAOA needing only 60 Senate votes to pass, Zuanic seemed to believe that goal may not necessarily be difficult to achieve.
De-scheduling and classification of cannabis as a dietary supplement is business-friendly and could likely garner 60 votes, he explained.
Furthermore, Zuanic noted that the bill does not require a SAFE act as such to be included because the new law could have “safe harbor language that would open the door for banks with a federal charter to service the industry and trigger US exchanges to up-list US cannabis companies now trading OTC.”
Zuanic went on to recommend several compromises that could help the bill get those essential 60 votes.
To help decriminalization get approved, Zuanic believes the proposed pot possession limit should be reduced from 10 pounds to 20 ounces;
To “budget” the “opportunity fund” and SBA exposure as well as support for non-profits with clear dollar targets, and perhaps to “fund” it with new federal excise taxes;
To restrain the proposed federal excise tax at 15% for the first five years (rather than
25% by the fifth year);
To remove the inter-state trade proposal;
To set up clear review guidelines and enable judges to make case-by-case decisions on crime expungement and resentencing.
Positive Industry Catalysts – Realistic And Potential
In conclusion, Zuanic laid out several realistic positive catalysts in the next 6-12 months:
Continued sequential growth;
Launch of the recreational sales in states that have approved it; Expansion of the current medical marijuana programs;
As well as the potential ones:
Political comments from the draft’s sponsors, from other Democrats, the White House, and/or from Republicans;”
Justice Clarence Thomas advancing his recent cannabis-related commentary;
Lawsuits that lead the court system, and the Department of Justice to federally legalize cannabis.
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