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We Think the STATES Act is More Reasonable Because it Would Not be a Full Legalization of Marijuana: Analyst

Click here to view the video or read the full video transcript on Yahoo Finance.

Vivien Azer, Cowen and Company Managing Director and Senior Research Analyst joins the Yahoo Finance panel to discuss the Cannabis stock outlook as Democrats take control of the Senate.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. I want to spotlight the action we’ve seen play out in the cannabis space, following the Democratic wins in those Georgia key runoffs there. That was going to give control in the Senate to Democrats. Of course, we already saw some serious reform come through in the MORE Act that would decriminalize marijuana at a federal level pass through the House. Now the Democrats will control both chambers in the upcoming Biden administration. A lot of investors out there even more bullish on the cannabis sector.

But here to break down why we should temper maybe perhaps some expectations there is our next guest. Vivien Azer is Cowen and Company managing director and senior research analyst and one of the top analysts in the cannabis space. And Vivien, appreciate you coming back on the show. I mean, we’re walking through some of these scenarios that we could see with Democratic control.

It sounds like you’re not very hopeful that we’ll see the full MORE Act pass, but potentially some form of the States Act, which would let, you know– which would alleviate some of the concerns we’ve seen in the sector, from tax implications to some other things in terms of accessing the banking sector as well. So how big of a boost are you forecasting here as we move through 2021, and what do you see happening?

VIVIEN AZER: Hi, sure. Thanks for having me on. So that’s right. While the last Congress House of Representatives did vote on the MORE Act and it did pass by party lines, we do think that that was strictly symbolic. You know, given the narrow majority in the Senate in this newly minted Congress, we do think that the States Act is more reasonable because it would not be a full legalization. We think full legalization would be a little bit too progressive for some moderate Democrats in the Senate.

The way that the States Act gets done in part will be a function of whether the Democrats eliminate the filibuster or not. But regardless, we think some version of a modified States Act will go through. As you’ve rightly pointed out, it will eliminate a very onerous piece of the tax code. And so, it will normalize tax rates, improve pretty meaningfully the free cash flow profiles of these companies.