The federal government’s approach to marijuana use has seen a change as a result of the Biden administration’s efforts to reclassify the drug. This could serve to help legal marijuana companies around the country grow. 

While enthusiasm around this governmental shift is evident, the cannabis industry continues to be plagued with a significant issue: basic banking services are still difficult to obtain. 

Under the proposed changes, cannabis could be reclassified as a Schedule III drug, which is less restrictive than its existing Schedule I classification. This classification has been praised by many as a significant improvement. Proponents anticipate that this action could ease some of the legal obstacles facing cannabis enterprises and open the door for the drug to gain broader acceptance.

Still, many banks are still hesitant to collaborate with cannabis-related businesses, despite the potential of reclassification. A spokesman for the American Bankers Association, Blair Bernstein, claims that the primary issue is that cannabis is prohibited at the federal level, which puts banks at grave risk.

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The inability of financial institutions to offer basic banking services like credit cards, checking accounts, and loans has left many cannabis business owners in a precarious position. Businesses are severely impacted by this banking crisis, which forces them to rely primarily on cash flow and makes them targets for criminal activities.

While reclassification could be a positive step for legal cannabis businesses, these financial problems may not be immediately resolved by reclassifying marijuana. Even with a change in categorization, banks that cater to the cannabis industry would still be subject to stringent regulatory requirements and potential legal ramifications.

Professor Julie A. Hill of the University of Alabama School of Law said that any transaction involving cannabis is viewed with suspicion since the federal government has declared the drug to be illegal. This increases the complexity of banking issues.

There are still many challenges for both banks and cannabis businesses in terms of laws and inherent risks, even though the reclassification may cause some banks to reconsider their support for the industry. Additionally, the absence of financial services hinders the development of an open and transparent market by endangering not only cannabis enterprises but also more broadly based economic growth and regulatory oversight.

Despite these obstacles, the cannabis industry is optimistic about the potential benefits of the reclassification. Adam Goers, senior vice president of The Cannabist Company and coalition chair for cannabis scheduling reform, sees the proposal as a historic step that might lead to much-needed research and operator-beneficial tax reductions.

With no additional laws, like the SAFE Banking Act, in place, it is still unclear how the reclassification would ultimately impact banking access. Morgan Paxhia, co-founder of Poseidon Investment Management, believes that reclassifying is a necessary step toward federal legalization, but more work has to be done to ensure that cannabis companies have easier access to financial services.

The reclassification of marijuana from a Schedule I to Schedule III drug could be a big step toward federal legalization, but ongoing banking issues highlight the necessity for complete legislative solutions to guarantee the cannabis industry’s fair representation in financial services.