Banks Still Hesitant on Expanding Services for Cannabis Businesses Post-Trump Rescheduling Order

LOS ANGELES – President Donald Trump’s Executive Order fast-tracked the move to reschedule Cannabis under the Controlled Substances Act, aiming to ease research barriers and tax deductions for state-legal operators. Yet even as this policy shift takes hold, major financial institutions show little interest in expanding services to the $43 billion Cannabis market, citing persistent federal risks and compliance costs that outweigh potential gains.

The order directs agencies to finalize rescheduling rules and explore frameworks for hemp-derived products, but it stops short of federal legalization or lifting banking restrictions outright. Cannabis businesses, operating legally in 24 states for adult use and 38 for medical purposes, still navigate a patchwork where federal law views their activities as illicit. This tension keeps big banks at arm’s length, as executives weigh the threat of penalties against slim margins in a cash-heavy sector prone to robbery and regulatory scrutiny.

Data from the Financial Crimes Enforcement Network (FinCEN) underscores the bind. Through late 2024, 816 banks and 182 credit unions filed suspicious activity reports on Cannabis-related businesses, a figure that has doubled since 2015. Under 2014 guidance, these institutions must submit initial reports within 30 days of onboarding a Cannabis client, followed by quarterly filings, regardless of whether transactions raise red flags. About 80% of reports fall into the “Marijuana limited” category, simply noting ongoing activity, while 13% signal account closures due to compliance fatigue. Critics argue this system turns banks into unpaid auditors for federal agencies that rarely act on the information, driving up operational expenses and fees passed to operators.

Smaller players have stepped in where giants hesitate: roughly 800 financial institutions now provide basic deposit and wire services to the industry, covering most state-licensed firms. But advanced offerings like credit lines or merchant processing remain scarce, leaving companies to rely on high-interest alternative lenders or cash reserves. A recent Senate hearing highlighted this gap, with testimony noting that full banking access could cut borrowing costs by half for many operators, yet federal conflicts deter broader entry. Experts at Reuters point to elevated loan rates [often 15% or more] as a direct result, squeezing profitability in a market where gross margins hover around 40% before taxes.

Bipartisan lawmakers, including Sens. Cory Booker (D-N.J.) and Rand Paul (R-Ky.), have called for pairing rescheduling with measures like the SAFER Banking Act to shield banks from federal reprisals. The American Bankers Association echoes the caution, reminding members that dual compliance with state and federal rules demands ironclad risk assessments. Without congressional action, reclassification alone may nudge a few more community banks into the fold, but Wall Street’s appetite stays muted – big firms like JPMorgan Chase and Bank of America prioritize sectors free of such overhangs.

For the Cannabis trade, this means more years of makeshift finance, stunting scale even as consumer demand climbs 20% annually. If rescheduling unlocks even modest lending flows by mid-2026, it could signal a thaw. Otherwise, operators face a stark choice: consolidate under cash constraints or push harder for full reform. Either way, the industry’s resilience shines through, built on adaptation rather than easy capital.