Donald Trump’s reelection has left the cannabis industry facing familiar questions about its future under a federal landscape that repeatedly has dangled reform without substantial progress. Over the past decade, cannabis companies, advocacy groups, and investors often have pinned hopes on political promises for sweeping federal reform. Yet, with each election cycle, legislative change continues to be a mirage. As states increasingly embrace legalization, the national outlook remains fragmented. Industry leaders may benefit from shifting their strategies away from wishful thinking and instead doubling down on what is within their immediate control.
Cannabis reform has become something of a political football, used as leverage and election fodder by both major parties. But federal change has proven elusive. For example, during his last campaign, President Joe Biden pledged to work toward decriminalization and even hinted at rescheduling. However, while some symbolic measures were taken—such as pardoning federal cannabis offenses for simple possession—comprehensive reform stalled. Despite majority support for legalization among Americans and notable strides at the state level, the complexities and divisiveness of federal cannabis reform mean promises often are unfulfilled.
Trump’s reelection suggests a continuation of this inertia at the federal level. Historically, he has shown ambivalence about legalization, allowing states to move forward without federal interference but not actively advocating for reform. Reelection likely reinforced his belief legalization is a state-driven issue, so the prospect of federal change remains uncertain.
A major misconception within the industry is that federal legalization or sweeping reform will solve myriad challenges; however, banking access, tax burdens, and regulatory issues won’t be resolved instantly by federal legalization alone.
Take banking, for instance. Though federal legalization could, in theory, produce greater access to financial services and credit options, the reality is that the industry remains cash-intensive and highly regulated. Many traditional banks are reluctant to embrace companies in sectors with those characteristics. In Canada, where cannabis is federally legal, only a limited number of institutions are willing to provide services to the industry due to regulatory risks, high compliance costs, and the sheer complexity of managing industry relationships. This reality serves as a sobering example: Federal legalization does not dissolve unwillingness to offer financial access.
Tax burdens present another persistent challenge. The federal tax code’s Section 280E prohibits deductions for businesses that “traffic in controlled substances,” leaving cannabis companies to face effective tax rates upwards of 70 percent. Removing this tax burden is contingent on rescheduling or descheduling the plant, which is separate from legalization. Even if a new administration were to reschedule cannabis to Schedule III or lower, thus alleviating the 280E tax burden, the move wouldn’t eliminate myriad state-specific compliance costs and regulations that continue to strain businesses’ financial health.
Even though federal reform appears stagnant, state-level advancements continue at a rapid pace. As of today, nearly forty states have some form of legalized cannabis sales and use, either for medical or recreational purposes or both. In this movement, each state brings unique regulations and tax structures, presenting both challenges and opportunities for companies.
By tailoring their business models to adapt to individual state regulations and building relationships with state-level policymakers, businesses can secure stability in their operations. Rather than relying on federal action, companies that prioritize strengthening compliance with state policies and investing in local markets may find more success. For example, multistate operators that comply with diverse local laws are better equipped to withstand regulatory shifts than those waiting for blanket reform.
Moreover, an approach that focuses on state markets allows companies to address the immediate needs of their customers, establish brand recognition, and generate revenue—all of which are critical in a volatile industry like ours. This strategy provides resilience and a clear path forward, regardless of national politics.
Industry leaders also may benefit by focusing on achievable, incremental victories within their control, such as expanding access to capital and credit through specialized financial services, building strategic partnerships, and advocating for provisions that protect banks working with industry entities. While the Secure and Fair Enforcement (SAFE) Banking Act in the House and its Senate cousin, the Secure and Fair Enforcement Regulation (SAFER) Banking Act, have stalled multiple times, a coalition-based approach that continues advocating for banking reform on a bipartisan basis might be more effective than counting on sweeping federal legalization.
Additionally, embracing cashless payments, automated clearing house transfers, and other payment systems can help companies operate more efficiently under current restrictions. This pragmatic approach provides a way to circumvent some of the industry’s limitations without waiting on external forces to change.
The lesson for companies as they navigate the uncertain landscape of federal reform is to maintain a pragmatic outlook. Banking on federal legalization as a panacea is a risk-laden strategy that has, so far, proved fruitless. Instead, industry leaders should focus on sustainable, state-by-state growth strategies and support efforts to create a stable regulatory environment within existing frameworks.
Federal reform eventually may come, but the pace and scope of that potential change are unknown. Rather than operating under an assumption that national reform is imminent, leaders must build businesses resilient enough to thrive under existing conditions. By focusing on tangible goals that are within reach, companies can secure a steady footing and lay the groundwork for success in an ever-evolving market.
A forty-year veteran of the credit union industry, Sundie Seefried is founder and chief executive officer at Safe Harbor Financial (NASDAQ: SHFS), a leader in facilitating financial services and credit facilities for the regulated cannabis industry. Previously, she served as CEO of Partner Colorado Credit Union.
