The AdvisorShares Pure U.S. Cannabis ETF MSOS is rallying 16.5% and the ETFMG Alternative Harvest ETF MJ is up by 6% after lawmakers late Wednesday re-introduced the SAFE Banking measure to open up the financial system to legal cannabis companies. The measure has passed the House seven times but has yet to win Senate approval. Jefferies analyst Owen Bennett said, “We think this has a real chance of passing,” in a research note published Thursday. “While we can debate U.S. cannabis fundamentals (we still think the outlook is as good, if not better, than any other industry), the thing that has been by far the biggest driver of depressed multiples has been the lack of access to institutional capital, due to being listed on the pink sheets, and the fact cannabis is federally illegal and investors potentially facing prosecution for money laundering,” Bennett said. “We think this is the year this could finally change.” Bennett noted that the latest version has 40 sponsors in the Senate including five Republicans. The latest bill does not provide specific capital market protections, but it includes language about proceeds from state legal cannabis businesses not being considered as proceeds from an unlawful activity, Bennett said.
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