THE COWEN INSIGHT On SAFE Banking**CANNABIS POLICY: DOOR CLOSING TO** **INCLUSION OF SAFE ACT IN DEFENSE POLICY BILL** **THE COWEN INSIGHT** Sen. Jeff Merkley told Politico he does not expect the SAFE Act to be included in the defense bill despite his efforts to convince Senate Majority Leader Chuck Schumer to accept the provision. As we do not expect a conference with the House, it is hard to see a path forward for adding SAFE to the defense bill. This opens the door for a broader bill next year, which is why we see it as a positive. **What is Happening** Sen. Jeff Merkley told Politico that he does not expect the SAFE Act on cannabis banking to be included in the defense policy bill. **Our View** Sen. Merkley is the Senate sponsor of the SAFE Act. It is why his comment matters. He is acknowledging that there are not the votes to add it to the defense policy bill. His quote to Politico: I don't think there are the votes for it when it doesn't have the support of our leadership. Merkley also told Politico that he tried to add some social justice provisions to the package but Senate Majority Leader Chuck Schumer remained opposed because he believes it would rob momentum from his broader legalization package. This outcome is consistent with our call for the last several months. We have always had trouble seeing why Senate Majority Leader Chuck Schumer would permit the SAFE Act to pass now as it would dampen pressure on senators to address broader cannabis legislation next year. We do not expect a formal conference on the defense policy bill. Instead, it appears lawmakers are trying to pre-negotiate the bill so the House can approve what the Senate adopts. We already had trouble seeing how House leaders could force Schumer to accept the SAFE Act in a conference. Without a conference, it is even harder to see how this could occur. We see this outcome as positive for cannabis. We believe Congress is likely to enact the SAFE Act next year if it is unable to pass a broader package. And the version of the SAFE Act next year is likely to be broader than what could have been added now. That includes capital markets access as well as a potential trade-off between social justice provisions and a fix for the 280E tax treatment https://www.facebook.com/groups/CanopyGrowth/permalink/1840303169513835/