It's been a head-spinning 24 hours in the news cycle, particularly for investors in the scorching-hot cannabis sector.

While cannabis bulls cheered Attorney General Jeff Sessions stepping down Wednesday — and Rep. Pete Sessions' loss — they said the federal government needed to clarify rules around banking in the industry before big institutions would jump in and the market could really open up.

Still, the past 24 hours "is the first time I see the light at the end of the tunnel," a cannabis CEO told Business Insider.

It's been a head-spinning 24 hours in the news cycle, particularly for investors in the scorching-hot but often volatile cannabis sector.

In the past two days, Michigan became the first state in the Midwest to legalize recreational marijuana. Bright red Utah and Missouri voted to legalize medical marijuana. And two of marijuana's staunchest opponents in Washington, Rep. Pete Sessions and Attorney General Jeff Sessions, were kicked to the curb.

The Canadian marijuana producer Tilray's stock has been on wild a ride, gaining over 30% immediately after Sessions announced he was stepping down on Wednesday. The stock has since fallen over 12% during trading on Thursday, perhaps due to confusion over where Sessions' replacement, acting Attorney General Matthew Whitaker, stands on marijuana.

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To Todd Harrison, the founding partner of CB1 Capital, a cannabis-focused hedge fund, these huge swings in the cannabis sector are just a sign of "shaking out the weak hands" and putting the shares in "firmer accounts."

All this has led the many cannabis bulls to predict that there will be some federal movement in the US on marijuana legalization — or at least to allow cannabis companies to access regular banking services — in the near future.

Paul Rosen, the CEO of Tidal Royalty, a Toronto-based firm that provides financing to US cannabis firms, said pending legislation like the bipartisan States Act — cosponsored by Sens. Elizabeth Warren and Cory Gardner — was the most likely path for the federal government to clarify its position on the patchwork of state-legal cannabis industries.

If passed, the States Act would exempt states that have legalized marijuana from the Controlled Substances Act, effectively removing a conflict between state and federal law. The bill would also clarify rules around banking and tax deductions, allowing cannabis to operate like any other industry.

And this, said Brady Cobb, an attorney who is the CEO of SOL Global Investments, is what would let big institutions — like BlackRock and Goldman Sachs — "jump headlong" into the US cannabis operators.

"This is the first time I see the light at the end of the tunnel," Cobb said.

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Harrison said that Sessions' stepping down was "positive on the margin" for weed's expansion in the US but that clarity around banking rules was the more "meaningful catalyst" for the cannabis industry.

"The bulls are training their ears on that," Harrison said.

BlackRock's president, Rob Kapito, said last week that his firm "will be investing" in the cannabis industry, but because most bank custodians won't clear cannabis stocks, it'd have to wait.

The first likely targets for institutional investors are the billion-dollar retail cannabis companies that operate in multiple state markets, like MedMen and iAnthus, according to Morgan Paxhia, managing partner at cannabis-focused hedge fund Poseidon Asset Management.

Big institutions are "stuck with the law of large numbers," Paxhia said. They have to focus on deals worth hundreds of millions that will actually "move the needle" on their balance sheets, he added.

"Otherwise, what's the point in terms of risk?" Paxhia said. "It's a headache for compliance."

And to most investors in the space, it's still early innings for the cannabis industry.

"In the context of 30,000 years of humanity's relationship with cannabis, 90 years of propaganda is like a pimple on an elephant's ass," Harrison said. "The best catalysts are still in front of us."

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