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Too much Cash in Cannabis New Bill Coming

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Both sides of the political aisle are throwing their support behind a bill to embed key marijuana banking legislation in a larger package intended to improve American competitiveness, raising the prospect that a major cannabis bill will pass through the upper chamber this year. As part of a broad package being worked out in both chambers designed to improve supply chains and manufacturing, Sen. Patty Murray, D-Wash., is pushing for the SAFE Banking Act to be included. The legislation, which cleared the House earlier this year, would protect financial institutions that service state-legal marijuana businesses from being penalized by federal regulators.

Washington Senator Patty Murray is fighting to include cannabis legislation in a new bill that is currently being considered by the Senate. The legislation, which was featured in the House’s version of the bill known as the Competes Act, would aim to reduce the amount of cash that weed dispensaries are forced to use. This makes them prime targets for robberies, as well as creating other public safety concerns. “Weed dispensaries are currently sitting on a ton of cash because they’re not able to deposit it in banks,” Murray said in a statement. “This puts them and their employees at risk, and it’s just not safe.”

Several senators are attempting to incorporate the bill, which has been passed in the House six times and has dozens of Democratic co-sponsors, into the larger competition package. The aim is to use the Cannabis Act as a way of evening out some of the tax advantages that have been extended to the marijuana industry. “We’re going to have to get more aggressive on this,” said Senate Majority Leader Chuck Schumer (D-NY) in an interview. “The fact that there’s so much cash in cannabis creates all sorts of problems.”

Under current law, marijuana businesses are not able to deduct business expenses like advertising or rent from their taxes. They are also required to pay a higher tax rate than most other businesses. The new bill would allow them to deduct those expenses and lower their tax rate. “The bottom line is that the banking bill has been on the books for a long time. It’s ready to go. It must be enacted,” says Senate Democratic Whip, Jon Tester of Montana, a member of the conference committee and co-sponsor of the SAFE Banking Act.

According to one Montana newspaper, Sen Steve Daines believes that other Republicans may be willing to support the legislation. “We’ve got nine Republican co-sponsors officially on it, with around 50 Democrats,” he said. We have the votes in the Senate to pass the SAFE Banking Act as a standalone if we wanted to; there are just a few remaining undecideds.” But while the SAFE Banking Act may have enough support to pass in the Senate, it’s unclear whether House Republicans will take up the legislation. It’s also possible that President Biden could veto the bill if it does make it to his desk.

In the meantime, cannabis businesses are forced to operate on a cash-only basis.

Before the August recess, when Congress shifts its attention to the November midterm elections and legislation slows to a crawl, Senate conferees are expected to complete a compromise China competitiveness bill that may win the backing of 60 senators. Senator Schumer (D-N.Y.), who previously blocked the SAFE Banking Act due to concerns that its passage might harm prospects for tougher action on China, has now signed off on the new bill. The SAFE Banking Act would protect banks that work with cannabis businesses from being penalized by federal regulators. The legislation would also allow for greater transparency and tracking of the cannabis industry, which is currently operating in a legal gray area.

If the banking bill is coupled with provisions to expunge marijuana convictions and repair damage caused by the war on drugs, Senate Democrats are said to be willing to pass it. But it’s unclear if Republicans will go along with those provisions. However, conference committee rules prevent lawmakers from adding further social equity or criminal justice reform provisions to the SAFE Banking Act, making it more difficult for it to get Schumer’s approval and becoming part of the final package that goes to President Biden’s desk.

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K Street lobbyists anticipate that about a dozen GOP senators will vote for the legislation, which cleared the House last year with support from every Democrat and almost all Republicans. Even so, some GOP senators have concerns about whether or not the bill is appropriate for inclusion in the China competitiveness package. Bill Cassidy (La.) and Roy Blunt (Mo.) said they aren’t sure if it’s a good fit. Lawmakers are rushing to pass the banking bill before it becomes a midterm election issue. Industry lobbyists are pushing for a quick passage of the bill, citing a recent spate of robberies at cash-only marijuana dispensaries as motivation. In March, an employee at a Washington state pot shop was shot and killed during an armed robbery, while a robber fatally wounded the owner of a Colorado dispensary during a holdup last month.

“If you look at what’s happening in Colorado and Washington, there are increasing concerns about public safety with all this cash on the streets,” said Aaron Smith, executive director of the National Cannabis Industry Association. A key sticking point for some GOP senators is whether the legislation would protect banks. The current system is not working and the new bill will help to correct that, said Sen. Jeff Merkley (D-Ore.), a co-sponsor of the legislation. “This is a commonsense solution that says let’s provide banking services so we can get rid of this huge public safety hazard,” he said.

Merkley said he believes there is enough GOP support to pass the bill, but it’s unclear if Senate Majority Leader Mitch McConnell (R-Ky.) will bring it up for a vote. A spokesman for McConnell declined to comment on the legislation. Advocates have attempted to persuade Schumer and other hesitant Democrats that the banking bill’s passage would help boost cannabis legislation, not hurt it. “My experience has been that every time you get someone who is somewhat uncomfortable with wider change but might be persuaded on modest details, once you get them to vote for those minor changes, it becomes much simpler to get them to vote for much bigger changes,” said Steve Elmendorf, a Democratic lobbyist who is working on the issue. Elmendorf added that he thinks it’s “inevitable” that marijuana will be legalized at the federal level within the next five years.

Last week, the American Bankers Association and bankers groups from all 50 states urged Senate leaders to include the banking bill in the conference report, stating that the “urgently needed” legislation would address the recent spate of robberies and improve transparency and tax collection for cannabis businesses. “The inability of state-licensed cannabis firms to access safe and regulated financial services has created public safety risks and unnecessary costs for these businesses,” the groups wrote. The banking bill is also supported by many law enforcement groups, including the National Sheriffs’ Association and the Major County Sheriffs’ Association. “This legislation will provide much-needed clarity to financial institutions that choose to serve state-licensed, legal cannabis businesses and ancillary companies,” the groups said in a letter to Senate leaders.

The legislation has also picked up support from several business groups, including the National Association of REALTORS®, the American Trucking Associations, and the U.S. Chamber of Commerce. State officials have been inundating the Senate with similar missives. Colorado Attorney General Philip Weiser (D) and Ohio Attorney General Dave Yost (R) recently penned a letter to Senate leaders, noting that the existing system encourages crime while also preventing accurate monitoring of trillions of dollars in marijuana sales.

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Million-Dollar Mansions Lose Luxury Reputation As Purchasers Get Less Space: Shrinkflation

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Shrinkflation

The issue known as “shrinkflation,” which occurs when the price of something stays the same or increases even as the item gets smaller, affects more people than just grocery shoppers.

Homebuyers must also be concerned about “shrinkflation.” According to new research from real estate website Zillow, the trend is affecting properties, especially those in the $1 million price category, where the size of the homes that purchasers are getting for their money is reducing.

According to Skylar Olsen, chief economist at Zillow, it’s one way that inflation is having an impact on the housing market.

More from Personal Finance: Mortgage expenses could increase by $104,000 as a result of lower credit ratings.
These five cities have expensive rents. Cheaper places carry additional costs. For homes of any price range, money won’t go as far, she claimed. But given the expectations buyers frequently have of it, the $1 million mark is particularly eye-catching.

Million dollar homes aren’t as luxurious as they once were, according to Olsen.

In California, the notion that $1 million is only sufficient to purchase a standard home has been around for a while. Currently, Olsen said, more and more markets are feeling the same way.

According to Zillow, more than twice as many properties worth $1 million or more were sold this spring as there were two years earlier. Austin, Texas; Portland, Oregon; and Riverside, California saw the largest rises.

However, according to Zillow listings floor plan data, shrinkflation can be applied to $1 million homes keep getting smaller. Midway through 2020, the size of these dwellings peaked at 3,021 square feet; by early this year, it had decreased to 2,530.

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The size of a home at that price point has increased to 2,624 square feet, but it is still 397 square feet less than the peak in 2020.
There are fewer bathrooms in smaller million-dollar mansions.

According to Zillow’s data, the typical property selling for approximately $1 million has decreased since 2019 in almost all major metropolitan areas. According to the survey, $1 million homes nowadays are often older and have fewer bathrooms.

Homes at this price category saw the biggest size drops in Phoenix, where they decreased by about 1,116 square feet, and Nashville, Tennessee, where they fell by about 1,019 square feet.

Only two metropolitan regions had an increase in floor plan size for homes costing $1 million or more throughout that period. That includes St. Louis, which saw an increase of about 406 square feet, or roughly a room and a half, and Minneapolis, which had an increase of about 36 square feet, or about the size of a closet.
In Hartford, Connecticut, where the price per square foot is $205, potential house buyers willing to spend up to $1 million may get the most for their money.

Other mid-sized American towns including Indianapolis, with a price of $209 per square foot, Oklahoma City, with a price of $214, Kansas City, Missouri, with a price of $221, and Cincinnati, with a price of $222, came in second.

San Jose had the highest price per square foot out of all the big cities that Zillow was tracking, at roughly $715. As of July, the average single-family home in that city cost over $1.5 million.

How shrinkflation may be impacted by the market cooling

According to a new survey by Clever Real Estate, 72% of recent homebuyers regret their decisions because of the current heated real estate market. Buyer’s remorse was most frequently caused by overspending, according to 30% of respondents.

Nevertheless, there are indications that prices are declining as the market cools, with 1 in 5 sellers lowering their asking prices in August, according to Realtor.com. This could provide purchasers with additional opportunities to compare prices and acquire the greatest square footage for their money.

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Danetha Doe, economist at Clever Real Estate, advised in a recent research to “surround yourself with specialists who truly care about your goals and your dreams and who are informed of the local area.”

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Why The Yuan Is Being Strengthened By China’s Central Bank

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Yuan

According to experts, China’s central bank has made it clear that it wants to prevent the Chinese yuan from falling too much versus the dollar.

The People’s Bank of China declared on Monday that it will lower the minimum amount of foreign currency that banks must keep for the second time this year.

Theoretically, such actions would lessen the downward pressure on the yuan, which has fallen more than 8% against the US dollar this year, reaching two-year lows.

Chinese authorities frequently highlight the yuan’s position in relation to a currency basket, against which it has risen by 1% over the past three months.

Beijing’s most recent steps, however, demonstrate how crucial the yuan-dollar exchange rate still is, according to a study released on Monday by Ting Lu, the senior China economist at Nomura.

They presented two arguments:

“First, Chinese officials particularly worry about RMB’s bilateral exchange rate with USD because they believe RMB/USD somehow indicates relative economic and political strength in a year of the once-in-a-decade leadership upheaval and with rising US-China tensions.”

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Second, a significant decline in the RMB/USD exchange rate could harm domestic morale and hasten capital flight.

A new group of leaders will be chosen by China’s ruling Communist Party in October, thereby strengthening President Xi Jinping’s position of authority.

Over the past few years, tensions between the U.S. and China have risen, leading to tariffs and sanctions against Chinese IT firms.

As a result of the pandemic shock in 2020, China’s economic development has slowed during the past three years. Many experts have lowered their GDP projections to roughly 3% as a because of this year’s tighter COVID measures, which included a two-month closure of Shanghai.

The yuan has weakened as a result of the economic slowdown, which may help make Chinese products more affordable to customers in the United States and other nations.

The U.S. Federal Reserve aggressively tightened monetary policy this year, which led to a large increase in the value of the U.S. dollar.

The euro and the Japanese yen have also fallen to 20-year lows, which has helped the dollar as measured by the U.S. dollar index.
According to a report released on Monday by Goldman Sachs analyst Maggie Wei and colleagues, the PBOC “might have tolerance for further CNY depreciation against the USD, especially as the broad USD continues to strengthen. However, they might want to avoid continued and too fast one-way depreciation if possible.”

The researchers predicted that during the next three months, the yuan will weaken to 7 versus the dollar. By the end of the year, the foreign exchange specialists at Nomura expect a level of 7.2.

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Data from Wind Information show that between May 2020 and September 2019, the yuan last traded at 7.2 to the dollar.

According to Julian Evans-Pritchard, senior China economist at Capital Economics, “I don’t think it will go far beyond [7], certainly sort of beyond the 7.2 that we saw during the trade war,” in a recent interview.
He said, “I think that threshold is the key.” “I believe that if it rises above that point, expectations for the value of the currency run the risk of being unanchored, which is why they are unwilling to let it happen. You run the chance of seeing substantially higher financial outflows.

According to Wind Information, the PBOC fixed the midpoint of the yuan versus the dollar on Tuesday at 6.9096, which is the lowest value since August 25, 2020. The yuan is moderately controlled by China’s central bank, which bases its daily trading midpoint on current price levels.
Avoid placing a wager on a single issue.

The next reduction in the PBOC’s foreign currency reserve ratio, from 8% to 6%, is scheduled to go into effect on September 15th, according to a statement posted on the website of the central bank on Monday.

Liu Guoqiang, deputy governor of the PBOC, stated earlier in the day that individuals “should not bet on a certain point” and that the currency should move in two directions in the short term.

According to a translation of a Chinese version of Liu’s comments made during a press conference on economic policy, this is the case.

Liu continued to support Beijing’s long-term goals of increased yuan use abroad. The yuan will continue to gain prominence around the globe, he predicted.

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China Can’t Live Without Wall Street. Rare US Agreement Shows Why

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Chinese

A new U.S.-China pact aims to end one of the largest commercial disputes: how to audit Chinese companies on Wall Street.
Last Friday, authorities from both countries announced an agreement that would allow US officials to inspect these firms’ audit files, meeting a long-running demand stateside and bringing relief to businesses and investors.
Over 160 Chinese companies may have avoided instant expulsion from the world’s largest stock market.

Regulators are testing the new deal quickly. Unidentified sources told Reuters on Wednesday that Alibaba, Yum China, and other companies will be inspected next month. The companies didn’t immediately comment.

Officials warn that the pact is simply the first step on a difficult topic, so Chinese enterprises aren’t out of the woods until access is guaranteed and a bigger agreement is reached. Experts think it won’t solve other US-China business flashpoints quickly.

US officials can scrutinize accounting firms in mainland China and Hong Kong that audit Chinese corporations’ books.

According to the US Public Company Accounting Oversight Board, this is the most comprehensive US-China transaction ever. Gary Gensler, head of the US Securities and Exchange Commission, says US investigators will visit China and Hong Kong “by mid-September” (SEC).
“Reaching an agreement on these pilot inspections was the fundamental test of whether the two sides could clinch a bigger deal,” said Lauren Gloudeman, Eurasia Group’s China director.
Drew Bernstein, co-chairman of Marcum Asia CPAs, believes the first key hurdle has been passed.
“China believes allowing certain of its enterprises to access US financial markets is in China’s interests, and regulators have made major concessions to reach an agreement,” he said.

Alibaba (BABA), Baidu (BIDU), and JD.com all at risk (JD).
US regulations state that corporations who don’t completely open their books will be banned from trading in 2024. This deadline is flexible.
Recent months have seen increased strain. This year, the SEC added more Chinese companies to its list of potential expulsions, and US lawmakers have called for an ultimatum.
China traditionally resisted letting foreign regulators review its accounting businesses, citing security concerns. Some Chinese enterprises have left US markets due to hostility.
Five state-owned companies left the NYSE this month, citing poor turnover and exorbitant prices. China Life Insurance, PetroChina, Sinopec, China Aluminum Corporation, and Sinopec Shanghai Petrochemical delisted voluntarily.

Alibaba, perhaps the best-known Chinese business among Western investors, aims to elevate its Hong Kong listing to main status by year’s end.
The company, whose shares have traded on the NYSE since 2014, wants two primary listings.
Hong Kong is a popular destination for firms worried about Wall Street.
The delisting risk of US-listed Chinese stocks cannot be totally mitigated in the immediate future, according to Bocom International, the investment banking arm of Bank of Communications.
Dual primary or secondary listings in Hong Kong are “desirable” for now, they wrote Monday.

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The situation has forced corporations to reassess their strategies and slowed share issuing.
Eight Chinese companies have gone public in the US so far this year, compared to 37 in the same period last year.
Their value has plummeted. Dealogic data reveals US IPOs have raised $332 million so far in 2022, down from $13 billion a year ago.
The market collapse has produced a dismal IPO market for all companies.
Some Chinese gamers fear a regulatory crackdown.
Didi, China’s largest ride-hailing company, is a cautionary tale. The company went public in New York last year but delisted after the domestic crackdown.
If the US Congress sees China sticking to the audit accord, Chinese shares could rise.
“Chinese management teams remain highly intrigued and motivated to list in the US,” Bernstein added.
If the IPO market rebounds next year, Chinese listings could increase in 2023.

Analysts doubt the new audit deal will clear corporations.
Goldman Sachs analysts see a 50% possibility of delisting Chinese equities.

The SEC chairman warned last week that corporations face ejection if US officials can’t access their files.
“We’ll see,” he said.
Confirmation of planned inspections “makes it very probable, 90% likely, that the two sides reach a broad inspections deal before the end of the year or soon after,” Eurasia experts stated.
“The top US regulator won’t fly to Hong Kong if it doubts China’s promise”
Xiaomeng Lu, Eurasia’s director of geo-technology, warned Beijing might yet delist additional SOEs “These companies control national security-sensitive data.
“Rather than annual inspections, China may select this route “Her team reported.

Will this improve US-China relations?
Despite advances, the two superpowers will likely disagree on other topics.
“Though the deal is a favorable signal broadly, it does not have significant feed-through to the broader bilateral relationship,” Gloudeman, Eurasia’s China director, said.

“Geopolitical flashpoints like Taiwan and China’s alliance with Russia make a reset unlikely. Taiwanese and American elections could worsen the bilateral relationship.”

Bernstein said the purchase shows the limits of decoupling when links break.
“The US-China relationship reminds me of conflict-ridden marriages that can’t afford to terminate,” he remarked.

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