WASHINGTON – Moving cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA) would do little to improve banking access for state-legal cannabis businesses, according to the latest Congressional Research Service (CRS) report about the effects of potential rescheduling.
While reclassifying cannabis onto a less-restrictive schedule would provide some benefits for the industry—like permitting more research and removing certain federal tax burdens—cannabis would remain illegal at the federal level. As a result, financial institutions would face the same legal risks under a handful of strict rules and regulations implemented to combat money laundering.
“DOJ’s proposed rescheduling of marijuana, in and of itself, is not likely to alter substantially the risk profile associated with providing financial services to state-sanctioned marijuana businesses,” the report states. “Rescheduling would have no effect on state recreational marijuana laws because recreational marijuana activities would remain unlawful under federal law. For medical marijuana regimes, Schedule III drugs, unlike those on Schedule I, can be lawfully dispensed by prescription—but only if they are approved by the Food and Drug Administration (FDA).”
As the report notes, the FDA has not approved cannabis as a prescription drug. If the agency were to change its relationship with cannabis medicine, all manufacturers, distributors, and sellers would need to register with the DEA and follow strict guidelines for Schedule III drugs including safeguarding, recordkeeping, and reporting under the CSA. Medical patients would need a prescription from a medical professional in compliance with federal standards. But as the CRS report points out, current state medical marijuana laws “do not meet these federal requirements.”
According to the report, the House and Senate hold the power to mitigate the legal risks financial institutions face when providing services to cannabis businesses. In September 2023, the Senate Banking Committee held a hearing and published a “favorable report” on the Secure and Fair Enforcement Regulation (SAFER) Banking Act. The House has passed versions of the very similar Secure and Fair Enforcement (SAFE) Banking Act seven times.
These bills would protect depository institutions from legal liability under the Bank Secrecy Act, anti-money-laundering laws, and asset-forfeiture laws when providing services to state-legal cannabis entities. In addition to treating cannabis income as revenue collected from a lawful source, the banking acts would protect the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and other federal agencies providing mortgage loans, guarantees, and insurance programs.
They also would require the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to develop new regulations and guidelines for cannabis-related suspicious activity reports (SARs). To date, FinCEN has received more than 410,000 cannabis-related SARs from about 680 financial institutions. Finally, the bills would limit regulators’ authority to encourage or force a financial institution to close a customer account based on “reputational risks” associated with state-legal cannabis operations.
