Briefing

U.S. bill that aims to open financial system to cannabis companies

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The Secure and Fair Enforcement (SAFE) Banking Act would protect banks working with cannabis firms from criminal scrutiny. A U.S. House committee is debating the bill Tuesday  afternoon. (Financial Post)

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Talking point: Canadian cannabis companies have had an edge over their U.S. neighbours both because of recreational legalization, and because they have access to cheaper capital, and more of it. The SAFE banking bill will change that by freeing up banks that were previously leery of getting involved in the not-yet-legal space to lend. The change will unleash an onslaught of more moneyed competition that will eat into Canada’s first-mover advantage. It’s something the cannabis sector here has been anticipating, however, it’s not clear it’s fully braced for it. Some Canadian giants in the space have already given up significant ownership to U.S. companies: beverage company Constellation Brands invested $5 billion in Canopy in August 2018 and, that December, tobacco company Altria funneled $2.4 billion into Cronos.