Federal Reclassification of Cannabis Unlikely to Resolve Banking Challenges

LOS ANGELES- Despite the potential federal reclassification of cannabis to Schedule III under the Controlled Substances Act, significant banking hurdles remain for state-legal cannabis companies. The American Bankers Association (ABA) has highlighted that the change in scheduling will not alleviate the legal barriers that prevent these businesses from accessing traditional financial services. The ABA has clarified that without the passage of the SAFER Banking Act by Congress, the fundamental banking challenges for the cannabis industry will persist.

According to the ABA, the reclassification of cannabis does not address the overarching issue that cannabis remains federally illegal, which deters banks from servicing the industry. “Cannabis would still be largely illegal under federal law, and that is a line many banks in this country will not cross,” stated the ABA in a recent announcement.

The association emphasized the need for the SAFER Banking Act, a bipartisan legislative effort that would permit banks to provide services to cannabis businesses in states where such activities are legal. This act is seen as crucial for enhancing public safety, tax collection, and transparency within the cannabis sector.

Blair Bernstein, a spokesperson interviewed by the Associated Press, reiterated that the federal decision to reclassify cannabis “has no bearing on the legal issues around banking cannabis.” Meanwhile, Morgan Fox, political director for NORML, expressed skepticism about the impact of federal reforms on easing banking restrictions for cannabis businesses.

Currently, approximately 675 financial institutions engage with cannabis companies, but the scope and nature of these services remain unclear. It is uncertain whether these institutions primarily serve businesses directly involved in cannabis cultivation and sales, or if they are limited to entities indirectly connected to the industry, such as landlords of business premises used by cannabis companies.

The House of Representatives has passed versions of the cannabis banking reforms, known as the SAFE Banking Act, multiple times, yet the legislation has consistently failed to advance in the Senate. This ongoing legislative stalemate underscores the complex and contentious nature of cannabis banking reforms at the federal level.