Cannabis investments will likely benefit from new House leadership, Jeff Sessions' departure

Mergers & Acquisitions asked Michael Gruber, managing partner at Salveo Capital, to share his thoughts on how the mid-term elections will affect M&A and the cannabis sector. For more on M&A trends in cannabis, read the guest article written by Salveo's Jeffrey Howard: How to seize M&A opportunities in marijuana’s gray market.

How will Democrats’ winning control of the U.S. House of Representatives affect the financial services industry in general and private equity and M&A in particular?
The Democrats’ win in the House should be significant. First of all, Republican Pete Sessions of Texas, failed in his re-election bid for Texas’ 32nd Congressional District. Sessions had been one of Congress’ most powerful and vocal marijuana prohibitionists. Representative Sessions used his position as Chairman of the House Rules Committee to block House floor members from voting on a significant number of marijuana amendments during his leadership tenure. His removal as an impediment to legislation should have an impact whether it be allowing veterans to have medical cannabis access, increasing banking access for cannabis businesses, preventing Federal interference on state compliant companies, and more. The other big bombshell today was that Jeff Sessions is out as Attorney General. Sessions was clearly never a fan of the cannabis industry, and although federal agencies were largely de-funded to do much enforcement, his negative stance always cast a dark shadow over operators, and more than anything, he spooked investors from a comfortable position. The investment community has been looking for greater clarity as to how the Federal government will get involved with cannabis operations in each state, and with mixed messages, and a lack of access to traditional banking services, there has been a cloud over the industry. With new leadership in the House and with Sessions gone, a more hands-off approach from the federal government is an easier bet to make, and investors will most definitely get more comfortable with making an investment in cannabis related companies. Salveo Capital has gotten more comfortable over the last few years, and we clearly see an even much brighter future ahead, and where we see an opening for increased medical research on cannabis as well as loosened restrictions on banking being key to help drive this industry growth.

Sean Doyle