The House voted 321-101 on Monday to approve a legislation that would allow banks to provide services to cannabis companies in states where it is legal.
The bill states that proceeds from legitimate cannabis businesses would not be considered illegal and directs federal regulators to craft rules for how they would supervise such banking activity.
Banks have generally been unwilling to do business with companies that sell marijuana or related products, fearing they could run afoul of federal laws.
Cannabis advocacy groups and industry associations are now hoping that a Democrat-led Senate would finally help push the bill through the upper house and to President Joe Biden's desk to be inked into a law.
The bill has been approved thrice in some form by the House in the last three years but failed to make any progress in the Senate, and analysts at brokerage group Cowen & Co voiced some concerns about the roadmap ahead.
"The problem is that Senate Banking Chair Sherrod Brown does not appear interested in advancing the House version of SAFE," the analysts said. "He wants social justice provisions, which we believe put at risk the GOP votes needed to overcome a filibuster."
Shares of Green Thumb Industries Inc, Curaleaf Holdings Inc and Cresco Labs, pot companies which have the biggest U.S. exposure and stand to benefit most from the bill's passage, rose between 1.5% and 3% in early trading.
"Given the bipartisan support behind the bill, and the fact that we currently have a Senate under Democratic control, the bill's chances of being passed by Senate are definitely better this time around," Jason Wilson, cannabis and banking expert at ETF Managers Group, said.
The National Cannabis Industry Association also said on Monday that advocates are hopeful that Senate Banking Committee Chair will take up the bill in the near future so that it can begin to move through the upper chamber as soon as possible and become law before the end of the year.
Cowen analysts said they believe there are 60 votes for the SAFE Act in the Senate, but added that it believes Senate Democratic leaders are focusing on federal legalization of marijuana ahead of banking access.
Senate Majority Leader Chuck Schumer, in an early-April interview with Politico, said he would try to advance legislation legalizing marijuana use for adults.
Asked about the SAFE Banking Act, he said he would like to see such a bill move forward as part of a more comprehensive measure - even if President Biden was not supportive.
(Reporting by Arathy S Nair and Shariq Khan in Bengaluru; Editing by Saumyadeb Chakrabarty)
By Shariq Khan