What Does Reclassifying Cannabis Mean for Banking

05/01/24

According to reporting from the Associated Press, the U.S. Drug Enforcement Agency (DEA) - at the urging of the U.S. Department of Health and Human Services (HHS), the Biden White House, and Congressional Democrats - will move to reclassify cannabis from a Schedule I to Schedule III controlled substance under the US Controlled Substances Act. The DEA's decision to reclassify cannabis comes eight months after the US Department of Health and Human Services initially advocated for the change. The Biden Administration initiated federal agencies to review the issue in October 2022 - marking the first time a President has ever made such a request. The DEA's determination must be reviewed by the White House Office of Management and Budget (OMB). Once OMB signs off, the DEA will take public comment on the plan to move marijuana from its current classification as a Schedule I drug to Schedule III. After the public comment period and a review by an administrative judge, the agency would eventually publish the final rule. Cannabis has been a Schedule I controlled substance since 1970. Shift it to a Schedule III would recognize the medical uses of cannabis and acknowledge it has less potential for abuse than some of the nation's most dangerous drugs. However, it would not legalize marijuana outright for recreational use on the federal level.

While this will be a significant policy shift in how the federal government polices and studies cannabis unfortunately it will not change its bankability. Even with cannabis being rescheduled it remains illegal under federal law, but legal here in Ohio. The conflict between state and federal law does not disappear due to this announcement and the banking industry will still need Congressional action in order to fully serve the industry. The OBL will continue to advocate for passage of the SAFER Banking Act and will educate policy makers why it is still needed when cannabis is rescheduled.