The Fate of Cannabis Rescheduling, SAFER Banking Act & Banking Services for Cannabis Businesses

The Biden administration’s recent move to reschedule cannabis from a Schedule I drug, alongside substances like heroin and LSD, to a less restrictive Schedule III category could have a significant impact on both the cannabis industry and financial services providers. 

The fate of the administration’s rule-making initiative, however, is now less certain in light of the results of the recent election. 

If the rule were to become final, Chris Van Dyck—an attorney at Washington, D.C.’s Cogent Law Group, which specializes in cannabis banking—expects that rescheduling of cannabis could become effective either by the end of the first quarter of 2025 or the beginning of the second quarter of 2025. But this is by no means certain. 

David Smagalla’s report for The Wall Street Journal looked at cannabis rescheduling’s effect on the U.S. banking industry. 

Banking Reform and the Safer Banking Act

Prior to the election, this initiative to reschedule cannabis had been the push for the Safer Banking Act, which would provide a legal “safe harbor” to banks and credit unions providing financial services to cannabis businesses. Most federally insured financial institutions avoid working with the cannabis industry, due to the fear of criminal liability, leaving cannabis businesses to rely on expensive and limited financial services. 

The Safer Banking Act

The Safer Banking Act would enable these companies to have capabilities that are standard for most other industries, including: 

• Opening bank accounts 

• Obtaining commercial and retail loans 

• Accepting debit-card payments 

According to Van Dyck, what was once the SAFE Banking Act and its more recent iteration, the SAFER Banking Act have languished in Congress for several years. Van Dyck says that the Act now continues to face an uncertain future in light of the recent election, particularly with a GOP-led Senate and more GOP Representatives in the House. 

Could Biden’s Cannabis Policy Reform Make Banking Easier for the Industry? 

President Joe Biden had has made considerable strides in cannabis policy, despite being initially cautious about the issue. His support for rescheduling cannabis represents a pivotal shift in federal policy and could still be a key part of his administration’s legacy, if re-scheduling proceeds. 

This move aligns with the growing public and state-level support for cannabis reform across the country. 

How Trump’s Stance Could Shape the Future of Cannabis Banking 

Donald Trump has not taken a clear position on cannabis reform, though he has hinted at possible support. In spite of his intimations of support, he would still have to contend with many in his own party who are not in favor of rescheduling or the SAFER Banking Act. 

Trump’s lack of a firm stance and his party’s resistance toward cannabis reform contrasts with the growing momentum for reform, as many states—including his home state of Florida—are moving toward legalization. 

For more details on the cannabis reclassification effect on banking, see the original Wall Street Journal coverage.