The cannabis industry in the United States has become one of the most dynamic and fastest-growing sectors in recent years, yet it continues to be weighed down by one of its greatest barriers—banking. While dozens of states allow cannabis in either medical or recreational form, marijuana’s status as a Schedule I controlled substance under federal law puts businesses in a unique bind. This federal authority dictates the rules of the financial system, making access to banking both limited and complicated.

From the perspective of banks and credit unions, working with cannabis-related businesses carries enormous risk. Federal statutes like the Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements obligate institutions to monitor accounts and file suspicious activity reports. Because cannabis is still illegal nationally, all proceeds from its sale are technically flagged as unlawful funds. For larger institutions that rely on federal charters and deposit insurance, the potential consequences of servicing cannabis clients are too severe to justify participation.

This hesitation has created a business environment where many operators are forced to rely on cash. Retail dispensaries in particular often handle millions of dollars in cash annually, a situation that presents constant security concerns and operational inefficiencies. Beyond the safety issues, a cash-heavy industry makes it more difficult for regulators to track compliance, for companies to pay vendors, and for employees to be compensated in standard payroll systems. Even something as routine as tax collection becomes burdensome when cash must be hand-delivered to state authorities.

In 2014, the Financial Crimes Enforcement Network (FinCEN) attempted to clarify how banks could serve the cannabis sector while meeting federal compliance obligations. The guidance required financial institutions to perform enhanced due diligence, monitor all transactions closely, and file ongoing suspicious activity reports. While this provided a roadmap, it did not remove the core federal risk. The result has been a small pool of regional banks and credit unions cautiously providing services, often charging high fees to cover their compliance costs.

Legislative reform has been proposed repeatedly to solve this dilemma. The Secure and Fair Enforcement (SAFE) Banking Act gained significant attention after passing the House of Representatives multiple times, only to stall in the Senate. In 2023, lawmakers introduced the SAFER Banking Act, broadening the scope to include transparency and accountability measures while still aiming to protect banks from federal penalties. Despite bipartisan support, progress has been slow, and cannabis businesses remain in limbo.

For those operating within the industry, compliance is now a balancing act between state legality and federal restrictions. Many companies employ dedicated compliance officers who work to ensure that financial transactions are fully documented, licensing remains in good standing, and all reporting obligations are satisfied. Fintech companies have also stepped in, developing payment processing and digital platforms designed to reduce reliance on cash, though these too face regulatory scrutiny.

The uncertainty surrounding cannabis banking underscores a broader tension between state-driven legalization and federal control. While the industry has proven its economic strength, it continues to be treated differently than virtually any other legal business sector. Rescheduling cannabis under federal law could provide some relief, but true integration into mainstream banking will likely require descheduling altogether. Until then, cannabis operators remain both pioneers in a rapidly expanding market and participants in one of the nation’s most complex compliance environments.

The trajectory of the cannabis industry is not solely shaped by cultivation, retail expansion, or consumer demand. Financial access remains one of its most critical hurdles. Without alignment between state markets and federal banking rules, the sector will continue to grow under constraints that limit its full potential.