Shares of marijuana companies experienced a brief surge before retracting after a U.S. Senate committee voted to advance a bill allowing legal cannabis-related companies access to banking services. The Secure and Fair Enforcement Regulation Banking Act, also known as the SAFER Banking Act, aims to protect financial institutions that offer services to legal marijuana companies. While the news resulted in immediate gains for some cannabis firms, most saw a decline later in the day. Companies such as Canopy Growth, Aurora Cannabis, and Cronos Group all experienced drops in their stock prices.

Investors had anticipated the bill’s advancement, causing the initial gains to be largely priced in. Jesse Redmond, head of the cannabis sector at Water Tower Research, sees the Senate vote as a positive step in a longer process. Although the bill faces further hurdles, passing it would allow banks to service cannabis companies operating within state legal jurisdictions. It may also open the door for credit card usage. The current prohibition on federal level cannabis use has led to limited access to financial services, forcing companies to rely heavily on cash transactions and making them targets for crime.

Boris Jordan, founder of Curaleaf Holdings, the largest U.S. cannabis company by market value, expressed optimism about the progress made, calling it a major achievement. The inability for legal cannabis businesses to access financial services has been a significant obstacle, hindering their growth and business operations. Passing the SAFER Banking Act would provide a crucial boost to the industry, allowing companies to pursue more efficient and secure financial transactions. While the bill still has a long way to go before becoming law, this Senate vote represents a significant move forward in the fight for legal cannabis companies’ financial inclusion.

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