Cannabis shares have recently soared high ahead of the Congressional hearing that will tackle the challenges faced by cannabis companies in terms of opening a bank account and maintaining it.
The House Financial Services Committee, which is a Democratic-controlled subcommittee, is scheduled to meet very soon in order to discuss the topic. Until then, cannabis companies will still be having a hard time securing accounts at some of the government-controlled banks. This is because weed is still subject to a federal ban, another issue that hinders the economic development of the states that have already legalized the use of cannabis for recreational or medical purposes.
A Clear Path to Banking
The Congressional Democratic Leaders of the United States have released a draft of the bill that aims to give companies a clearer path to banking. Democrats are considering other legislative measures in 2019 in order to promote the cannabis sector despite concerns that Canada won a huge first advantage in terms of fully legalizing cannabis since 2018.
Some of the cannabis advocacy groups have also urged lawmakers to proceed with the baking reform. They have also outlined the risk that companies face in operating their businesses in a “cash-only” basis. The higher the risks, the more money the companies will have to spend. They need to spend on hiring security guards in securing their cash when transporting it to pay state taxes and local taxes. Plus, they also need to hire more accountants who can dedicate more time to organizing cash to pay for business expenses and payroll. This will all lead to the overall increase in the cost of the product.
Cannabis Industry in Colorado
Colorado, one of the states that have legalized the use of cannabis for recreational and medical purposes, released their sales and tax revenue data in 2018 and they revealed that the figure has topped the $6 billion revenue since January 2014, which is when the sales of adult use cannabis started.
Sales of cannabis topped $1.55 billion in the year 2018, which is just above the $1.5 billion posted in 2017. This data was provided by the state’s Dept. of Revenue. Licenses, taxes, and fee revenues coming from the sale of cannabis have exceeded $265 million in 2018, which is an increase from the $247 million in 2017. Since January 2014, the state has already collected more than $927 million in tax revenue and this figure already includes the revenue from January 2019.
Canada’s Canopy Growth
The shares of Canada’s Canopy Growth (CGC) have been up 2.3%. According to an analyst, it’s expected that the company will benefit from the initial shipment of the products for the consumption of Canadian adult market. He also believes that future product offering that includes beverages and edibles can help to further drive the growth. The analyst also rated the stock as a buy with a price target of 100 Canadian dollars, which is around 67% above its current trading value.