Schedule III 'Doesn't Do Much For Banking': What's Next For Cannabis Financial Access?

The cannabis industry has long faced financial challenges due to its federal classification as a Schedule I drug, which has hindered access to traditional banking services. With the potential rescheduling of cannabis to Schedule III, many in the industry hope for improved financial access. However, experts caution that the impact on banking may be limited.

**Understanding Schedule III Rescheduling**

The Controlled Substances Act (CSA) categorizes drugs into five schedules based on their medical use, potential for abuse, and safety under medical supervision. Currently, cannabis is a Schedule I drug, indicating it has no accepted medical use and a high potential for abuse. If rescheduled to Schedule III, cannabis would be recognized for having medical use and a lower potential for abuse, joining substances like ketamine, anabolic steroids, Tylenol with Codeine, and buprenorphine (Suboxone).


**Impact on Banking**

While rescheduling could remove certain tax burdens like Section 280E, Tyler Beuerlein, chief strategic business development officer at Safe Harbor Financial, noted that banking oversight may remain unchanged. "Schedule III doesn't do much from a banking or regulatory oversight perspective," he said. The primary concern for financial institutions serving cannabis businesses remains federal restrictions on banking services.


**The Role of the SAFER Banking Act**

The Secure And Fair Enforcement (SAFE) Banking Act, which passed the Senate Banking Committee, offers a more direct impact on financial services providers. This bipartisan legislation creates a "safe harbor" from penalties for banks serving state-legal cannabis businesses, potentially encouraging more institutions to enter the market. However, the SAFE Banking Act's future is uncertain, as it awaits a Senate floor vote.

**Looking Ahead**

Rescheduling cannabis to Schedule III may not significantly impact banking access due to persistent federal restrictions. To improve financial access, additional regulatory changes are needed. The SAFE Banking Act provides a key solution, but full legalization and descheduling are required for comprehensive banking reform, allowing cannabis businesses to access traditional financial services.

In conclusion, while rescheduling cannabis to Schedule III may offer tax benefits and research opportunities, it does not directly address banking challenges. The cannabis industry must continue advocating for comprehensive banking reform, such as the SAFE Banking Act, to ensure improved financial access and stability.