Cannabis advocates see banking opportunities under Trump

David Odisho/Bloomberg

Donald Trump's return to the White House presents both opportunities — as well as uncertainty — for the cannabis industry and its ability to fully access the banking and payments industries. 

Hopes for the cannabis industry to gain freer access to the banking system soared when former President Biden moved to reclassify cannabis as a Schedule III drug, but the momentum for either full legalization or passage of the SAFER Banking Act stalled later in his administration. 

But hopes are high again. Tyler Beuerlein, chief strategic business development officer at Safe Harbor Financial — a firm that assists cannabis businesses to find banking solutions — says Trump may ultimately be positive for the industry because he has been more open to legalization in the past and generally supportive of new industries. Industry experts like him see potential gains not from direct cannabis policy shifts, but from broader financial and economic incentives.

"Trump, he's actually very transparent," he said. "I've been wildly pessimistic about legislative progress in the past … but I actually think there are some tailwinds right now, and I actually believe they have nothing to do with cannabis."

Not a lot is known about Trump's stance on cannabis, but he has shown increasing ties to industry leaders and support for state-level measures. Trulieve CEO Kim Rivers and Cresco Labs CEO Charlie Bachtell attended his inauguration, signaling at least some level of industry engagement. 

Early this year, the Biden administration's cannabis rescheduling effort suffered a major setback after DEA Administrative Law Judge John Mulrooney canceled the scheduled marijuana rescheduling hearings in mid-January, delaying the reform process for months. The decision followed a legal challenge from pro-reform witnesses, who argued that DEA officials engaged in improper communications and biased witness selection. Mulrooney's ruling asserts that federal law doesn't prevent him from halting the hearings and suggesting a fresh start with a new recommendation. Ultimately, the decision to accept or disregard any ruling rests entirely with the incoming DEA administrator.

While Mulrooney rejected calls to remove the DEA from the proceedings, he granted an interlocutory appeal, citing procedural missteps and agency misconduct. The hearings, originally set for January 21, are now on hold. 

Days later, Trump's appointment of Derek S. Maltz as acting DEA administrator marked another headwind for the cannabis sector. A longtime opponent of legalization, Maltz has openly criticized federal rescheduling efforts and linked cannabis to crime and public safety concerns. 

However, some cannabis advocates like Morgan Paxhia, co-founder and managing partner of Poseidon, a cannabis investment fund, say Maltz's appointment might not be the death knell it appears to be. 

"We think it is better to focus less on any appointee's dated/biased views on cannabis and more so on POTUS as the primary input for potential legislative reform and as it pertains to the scheduling of cannabis," she wrote in an email. "President Trump has been getting smart on legal cannabis, sees the economic benefits and is pro MAGA and DOGE."

In May 2024, the Biden Justice Department published in the Federal Register a notice of proposed rulemaking proposing to move marijuana from Schedule I to Schedule III. The agency held an initial public hearing on the proposal in December 2024 but after the DEA stalled further consideration of rescheduling, it is unknown whether the DOJ will finalize the proposal and, if so, what controls the agency would impose on marijuana.

Shifting marijuana from Schedule I to Schedule III wouldn't automatically align state-legal medical or recreational marijuana with federal law under the Controlled Substances Act of 1970. The primary distinction between its current Schedule I status and Schedule III placement is that Schedule III substances are recognized for medical use and can be legally prescribed, unlike Schedule I substances, which cannot be. That said, for any prescription drug to be legal, it must receive FDA approval, and while the FDA has approved certain cannabis-derived medications, marijuana itself remains unapproved by the agency.

Likewise, the manufacture, distribution, and possession of recreational marijuana — even at Schedule III status — would remain illegal under federal law and potentially subject to federal prosecution, a downside for advocates like Jim Higdon, co-founder of Cornbread Hemp.

"It's half-solving a problem … moving the problem towards resolution without fully resolving it," he said. "Nobody on the advocacy side woke up one day and said, 'What we really need is Schedule III.' It would appear that consumers won't see much difference from Schedule I to Schedule III."

That being said, Higdon notes that rescheduling would make cannabis businesses far more profitable. One effect of moving cannabis to Schedule III would be exempting such businesses from Section 280E of the Internal Revenue Code, which presently bars deductions for businesses engaged in trafficking controlled substances under federal or state law. Section 280E applies only to Schedule I and II substances, meaning rescheduling would allow businesses to deduct expenses on federal tax filings. Additionally, the DEA would no longer need to set annual marijuana production quotas, as the CSA doesn't mandate quotas for Schedule III substances.

"The cash flows of these businesses should increase substantially," Beuerlein said. "Their net revenue is going to increase overnight."

Higdon says rescheduling would be a relief for businesses and could be a step in the right direction towards decriminalizing the substance — which would allow cannabis businesses to enjoy the benefits of traditional banking and payments relationships. 

"Biden threw a bone to the cannabis community to reschedule to Schedule III for cannabis operators that will solve their tax problem temporarily," he said. "There could be some additional downstream benefits of Schedule III, but mostly it would demonstrate to lawmakers and regulators that at Schedule III the world doesn't end, and that we can proceed forward to a [complete] descheduling process."  

Beuerlein is optimistic about rescheduling, noting it could add thousands of previously uncounted cannabis jobs to official labor stats — an easy win for Trump on job creation.

"The labor statistics do not reflect cannabis jobs because it's Schedule I. Trump knows this, and he knows that if it goes Schedule III, he gets a half a million jobs hitting the Labor Statistics overnight," he said. "So you have to think about it from the lens of what does he care about — he cares about wins and job growth, right? So I think that single fact will be the catalyst for this, being Schedule III in short order."

Trump probably doesn't have strong views on cannabis itself, but he reportedly voted for Florida's adult-use legalization in November, according to his own social media post. His support for states' rights on the issue could be a key factor, says Beuerlein.

"He is very much in support of state rights," Beuerlein said. "I don't think we're going to see, you know, federal legalization or any action [to legalize cannabis]. I think we're going to see him leave it to states rights."

One of the knock-on effects of rescheduling cannabis and allowing business deductions by businesses would be more investment — including from banks — in and opportunity available to the industry according to Beuerlein.

"I think there's going to come a point in time where the U.S. capital markets can open up to the industry [and] you're going to see a flurry of [mergers and acquisitions]," Beuerlein said. "I think you're going to see valuations skyrocket. The other thing to remember is, when net revenues increase, all of a sudden, you have a much broader client base that can qualify for much cheaper lending than what the industry is currently borrowing at. So all of those things combined, you know, again, could be really big wins for the cannabis space."

One of the most difficult problems the cannabis industry has faced since state-level legalization began unfolding more than a decade ago is access to banking services. Various federal laws impose legal consequences on financial institutions that service businesses deemed to conduct criminal activity like distributing a Schedule I drug like cannabis. Even if state law allows it, businesses may be unable to access banking services due to federal anti-money laundering laws. The involvement of income from a marijuana-related business can also even prevent a bankruptcy court from approving a bankruptcy plan in certain instances.

Recent proposals would have addressed specific legal consequences of marijuana's Schedule I status. For example, the SAFE Banking Act — a version of which has passed in the House several times, most recently in 2021 — sought to protect depository institutions that provide financial services to cannabis-related businesses from regulatory sanctions. A related bill called the SAFER Banking Act was introduced in the 118th Congress. While efforts have cooled on the Hill for cannabis banking, people familiar with the legislative process say a third iteration of the bill — which some have dubbed the SAFEST Act — is currently in the works. 

Trump's announced intention to curb "de-banking" could pave the way for cannabis banking reform if Congress folds banking access for the industry into a larger bill.

For banks, cannabis rescheduling would change little

 The fight against what opponents call debanking — also referred to as Operation Chokepoint 2.0, a nod to an Obama-era policy discouraging banks from serving industries deemed reputational risks — has gained support from Trump. In a recent video address at the World Economic Forum in Davos, the President accused the CEOs of Bank of America and JPMorgan Chase of denying services to conservatives, echoing broader Republican complaints about "woke capitalism." Both banks denied making decisions based on politics, emphasizing compliance with government regulations.

That momentum could create significant potential for efforts to restrict the federal government from pressuring banks to deny certain legal businesses financial services. That could benefit many industries — including cannabis, according to Beuerlein.

"If you listen to Trump and what he talks about, he's very keen on what they deem as Operation Choke Point 2.0 and he's very vocal about what he calls conservative voices being silenced in the banking system," he said. "So what, what I anticipate them doing is coupling language that ensures that neither anything like Operation Choke Point or what he deems is, quote, unquote, silencing conservative voices can ever happen again through the banking system along with cannabis banking protections."

But while Republicans control both houses of Congress, they enjoy only a slim majority in the House of Representatives, leaving them with little wiggle room to move legislation. Even so, Higdon sees room for legislative progress, even if it could be an uphill battle.

"It's hard to say [if cannabis banking can pass]  because the margin in the House is so thin," he said. "It's really hard to see any meaningful legislative movement in this Congress."