October 2024

Treasury Report Shows Growing Financial Support of Cannabis Businesses Despite Federal Bottlenecks

A recent report from the U.S. Treasury Department, highlighted by NORML—the National Organization for the Reform of Marijuana Laws—shows significant progress in the relationship between financial institutions and state-licensed cannabis businesses. Over 830 banks and credit unions now openly support the cannabis sector, signaling a shift toward wider acceptance of this expanding industry.

Despite this progress, challenges remain. Fewer than 10% of financial institutions nationwide offer services to state-licensed cannabis businesses. The primary obstacle is federal law, which classifies marijuana as a Schedule I controlled substance. This creates legal risks that discourage banks from working with cannabis companies.

Federal Inaction Fuels Industry Challenges

The disconnect between federal and state policies presents significant difficulties. While the House of Representatives has repeatedly approved legislation allowing financial institutions to work with the cannabis industry without penalties, the Senate has yet to advance such measures. This ongoing legislative gridlock limits access to essential financial services, restricting the cannabis industry’s ability to grow.

Many cannabis businesses identify the lack of banking or investment capital as their biggest challenge. These financial hurdles disproportionately affect smaller and minority-owned businesses, exacerbating existing economic disparities.

Cannabis Industry Implications

The lack of reliable banking options forces many cannabis businesses to operate primarily in cash, increasing logistical challenges and security risks. Without traditional banking access, it becomes more difficult to obtain loans, pay employees, and expand operations. These barriers hinder growth and create an uneven playing field in an industry striving for broader acceptance and equality.

Advocating for Change

NORML has called for reforms to federal banking laws to align with state cannabis policies. The organization emphasizes that financial reform is crucial for the industry to function efficiently and sustainably. Without these changes, businesses, employees, and consumers will continue to face avoidable complications caused by regulatory inconsistencies.

The Way Forward

The Treasury report highlights the need for urgent federal reforms to reconcile state-level cannabis legalization with federal banking restrictions. Elected officials, industry leaders, and financial institutions must work together to create policies that support the fair and responsible development of the cannabis industry.

As the cannabis sector evolves, addressing financial barriers is critical not only for operational convenience but also for fostering equity and economic opportunity. By resolving these regulatory conflicts, the United States can help the cannabis industry thrive while promoting public safety and economic inclusion.