President Donald Trump has given the cannabis industry a potential lifeline: by moving the plant from Schedule I to Schedule III under the Controlled Substances Act, the federal government can finally pull it into the mainstream banking ecosystem. If the Justice Department’s fast–track plan succeeds, dispensaries could once again accept credit and debit cards, secure loans, and stream electronic payments—an unprecedented shift that could double the industry’s financial footprint and create thousands of new jobs.
Background and Context
For almost two decades, licensed dispensaries across states where cannabis is legal have faced one persistent barrier: federal law still places marijuana among the most restricted drugs, on the same schedule as heroin and LSD. Cannabis reclassification banking matters because until the asset trail is cleared, every dollar that flows through a legal shop risks being deemed the proceeds of a federal crime. This status has forced retailers to operate in cash, heightening security threats, and has kept banks wary of providing basic financial services.
Recent estimates show that U.S. legal cannabis sales reached about $30 billion last year, with retail revenue projected to climb to $34 billion by 2030. Yet despite these robust numbers, less than 15% of licensed businesses have a bank account that can process electronic payments. The disconnect stems from three intertwined problems: legal uncertainty, the difficulty of valuing assets as collateral, and the high cost of compliance with Suspicious Activity Reports (SARs).
International students and young entrepreneurs, many of whom are now exploring the cannabis market as a potential venture, are also impacted. Without reliable banking services, they face challenges securing working capital, managing payroll, and navigating tax compliance under a federal framework that treats cannabis as an illicit commodity.
Key Developments
President Trump’s executive order, signed on December 24, 2025, directs the Justice Department to expedite cannabis reclassification. If successful, the plant would move from Schedule I to Schedule III, a status shared by many accepted pharmaceuticals like Tylenol with codeine. The redefinition aims primarily at expanding medical marijuana and CBD research but carries secondary, industry‑wide implications:
- Banking access – Once legal, banks can open traditional accounts, offer debit card processors, and provide line‑of‑credit facilities without the specter of federal criminal liability.
- Investment and capital markets – Public and private investors would see a clearer risk profile, potentially boosting venture capital interest and reducing venture debt rates.
- Tax parity – Schedule III classification could entitle cannabis businesses to federal tax deductions and credits that are currently denied under the “controlled substance loophole.”
- Payment processing – Companies like Stripe, Square, and PayPal would be able to resume service, eliminating the “cash‑only” status that forces retailers to carry large sums on premises.
Elad Kohen, CEO of The Flowery (26 retail locations, 600 staff in Florida and New York), said the change could reduce the “constant security risk for our employees.” He added, “You’re dealing with paper, which makes you a target for crime.”
Impact Analysis
For international students studying business, finance, or entrepreneurship, the reclassification could open new doors:
- Students can now realistically apply for business loans from mainstream banks, enabling startup capital injections that were previously inaccessible.
- Cash flow management becomes more efficient with electronic payment gateways, reducing the need for safekeeping and theft prevention strategies.
- Tax compliance becomes less opaque; students can better predict tax liabilities and plan for year‑end tax submissions.
- Employment prospects widen, as banks and payment processors will likely expand hiring to support new cannabis clientele, benefiting students in finance, compliance, and risk management roles.
From a workforce perspective, the U.S. legal cannabis market employed over 400,000 people in 2024. The shift to Schedule III could unlock an additional 20–30% of that number as banks partner more closely, offering payroll services and employee benefit plans.
For the industry itself, the removal of a major regulatory hurdle would eliminate the “cash‑only” mandate that costs retailers millions in security, insurance, and operational inefficiencies. It would also create a level playing field for new entrants—especially small, community‑focused dispensaries that currently compete in a cramped, unregulated “cash‑only” niche.
Expert Insights and Practical Tips
Professor Amiyatosh Purnanandam of the McCombs School of Business notes, “If cannabis moves to Schedule III, the current legal uncertainty will vanish. Banks will see the industry as a normal business, lending more readily and at better rates.” He advises businesses to:
- Maintain immaculate record‑keeping to prove compliance with state licensing and tax obligations.
- Engage a dedicated compliance officer or outsource compliance to a specialist firm that can manage SARs and anti‑money laundering (AML) protocols.
- Build diversified funding strategies, including equity, convertible notes, and possibly federal grants now available under Schedule III.
Peter Su, a cannabis banking consultant cited in Rolling Stone, emphasizes the cost of due diligence: “The level of monitoring required is like having an entire compliance department in one person.” Businesses should therefore invest in technology platforms that automate transaction tagging and anti‑fraud screening.
For students planning to start a cannabis‑related business, the following steps can help position a startup for success post‑reclassification:
- Secure a reputable state license and ensure all documents are up to date.
- Develop a robust financial plan that showcases expected cash flow and collateral assets.
- Collaborate with a reputable bank early—proving that the business model has a sound financial structure.
- Stay informed on federal funding opportunities; with Schedule III, certain research grants may become available.
International students should also note the importance of visa considerations. The possibility of a schedule switch could affect employment categories. Engaging with an experienced immigration attorney who specialises in entrepreneurial visas (E‑2, L‑1, or O‑1) is advisable.
Looking Ahead
If the reclassification goes through, the first tangible change will likely be digital payment processors re‑entering the market. Within six months, dispensaries in states like Colorado, Oregon, and California are projected to report a 30% increase in transaction volume through card systems.
Banks will need to roll out dedicated cannabis banking lines; several major institutions have already announced exploratory talks. In the longer term, the expectation is that cannabis will be regulated in a way that mirrors other regulated consumer goods such as alcohol and tobacco—subject to licensing, taxation, and controlled distribution.
However, some political opposition remains. Senate Bill 471, introduced by Republican Senator James Lankford, aims to preserve stringent tax deductions and credits for cannabis operators despite reclassification. Policymakers will have to balance federal revenue interests with industry growth.
Meanwhile, the industry should prepare for potential regulatory updates. Federal labs will likely coordinate with state agencies to tighten product testing, labeling, and consumer safety standards, aligning them with those already in place for pharmaceutical and food products.
In sum, cannabis reclassification banking offers a catalyst for a more integrated financial ecosystem, job creation, and a wave of entrepreneurship—particularly for international students who bring fresh perspectives to the rapidly evolving landscape.
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