We are just a couple of months into 2025, and cannabis reform is already poised to massively impact the financial services industry. The changes we might see this year are expected to address longstanding challenges - and open some important new opportunities for financial providers.
1. Enhanced Access to Banking Services
Currently, many cannabis-related businesses (CRBs) are forced to operate on a cash-only basis due to federal restrictions. This not only poses operational challenges but also results in many security challenges. Legislative efforts like the Secure and Fair Enforcement (SAFE) Banking Act are aimed at providing "safe harbor" protections to financial institutions who opt to work with the cannabis industry, ensuring they are not penalized for offering much-needed services to CRBs.
This would likely increase the accessibility of banking, lending, and insurance services for the marijuana industry - and open up new revenue streams for players in those sectors.
2. Improved Tax Compliance and Deductions
The reclassification of cannabis from a Schedule I to a Schedule III substance under the Controlled Substances Act has been a hot topic for quite some time. When we finally see this change come to fruition, it is expected to alleviate many federal restrictions - particularly regarding tax deductions for cannabis businesses.
This change could seriously decrease the financial burdens on CRBs, allowing them to deduct ordinary business expenses like other businesses and potentially leading to increased profitability.
3. Increased Investment Opportunities
With the hotly anticipated federal legalization of cannabis and improved financial access, the cannabis industry is projected to experience enormous growth. This growth will be a boon for the industry, attracting more investors, and hopefully leading to increased capital inflow and market expansion.
As the legal landscape surrounding cannabis continues to evolve, we should see a more favorable environment for investment in the cannabis sector blossoming.
4. Enhanced Financial Stability
The ability to integrate cannabis businesses into the formal financial system will profoundly enhance financial stability by reducing the risks associated with cash-only operations. This integration would level the playing field for CRBs, putting them on more even footing with other lawful enterprises and creating a more secure business environment - and of course enhancing the security of the profits earned, which would no longer need to be exclusively moved physically.
5. Streamlined Regulatory Compliance
Finally, federal reforms should provide clearer guidelines for financial institutions that want to work with the cannabis industry. Clarity on the regulatory front would both reduce compliance costs and help assuage concerns over legal uncertainties, finally allowing financial providers to offer services to CRBs without the constant fear of federal penalties. The SAFE Banking Act, as one example, would help open the door to protect federally regulated depository institutions that could find a new market in providing financial services to CRBs.
Despite regulatory reform being a slow burn for years, expected changes to the legal framework surrounding cannabis in 2025 have the potential to give the financial services industry a major boost by enhancing access to banking, improving tax compliance, increasing investment opportunities, enhancing financial stability, and streamlining regulatory compliance. With the right changes enacted, the United States can create a more robust and secure financial environment for both cannabis businesses and financial institutions - a true win-win!
If you have questions about regulatory compliance or licensing issues surrounding serving the cannabis industry, please email Jake at jake.hines@ankura.com to further discuss how we can best assist your firm.
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© Copyright 2025. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
