Optimism and Caution: Potential Rescheduling of Cannabis to Schedule III

This week’s long-awaited and much-anticipated rescheduling announcement brings with it both industry excitement and significant questions about the future of the cannabis industry.  Let’s start with what we know. 

President Trump’s signing of an executive order directing federal agencies to complete the rulemaking process to reschedule cannabis from Schedule I to Schedule III under the Controlled Substances Act, as well as developing a regulatory framework for hemp-derived cannabinoid products, marks a meaningful shift in federal tone toward cannabis. For the first time, a sitting U.S. president has publicly and formally signaled that cannabis does not belong in the most restrictive category of federal drug control.

What this action means in practice, however, is far less certain.

At this stage, the executive order represents directional intent, not a fully realized regulatory outcome. The downstream impacts on taxation, banking access, compliance obligations, enforcement posture, and financial risk are still unclear. Despite much speculation, it is not yet known whether IRS Code Section 280E will definitively cease to apply, whether federal banking regulators will adjust the FinCEN guidance, or whether serving cannabis businesses will become meaningfully easier, or in some cases more complex.

What is clear is that this public shift in federal posture is broadly positive. It reinforces a growing consensus that cannabis has legitimate medical use, that prior classifications were misaligned with reality, and that federal policy is slowly moving closer to the state-legal cannabis economy that already exists.

For financial institutions and service providers, this moment calls not for immediate conclusions, but for careful observation, scenario planning, and disciplined risk management.

Background: Cannabis and Federal Policy Reality

The Controlled Substances Act and Cannabis

For decades, the placement of cannabis in Schedule I has been one of the most significant sources of friction between federal law and state-legal cannabis markets.  Placing the plant alongside substances like heroin and LSD, Schedule I classification asserted that cannabis had no accepted medical use and a high potential for abuse, a position increasingly at odds with medical research, voter initiatives, and state regulatory frameworks.

This classification has been symbolic and meaningful in that it has shaped:

• Federal enforcement posture
• Tax treatment under the Internal Revenue Code 280E
• Risk tolerance among banks, payment processors, insurers, and investors

The Resulting Financial Services Environment

In practice, cannabis financial services in the U.S. have developed without clear regulations beyond official guidance from FinCEN, rather than statutory protection.  This has resulted in less than 10% of financial institutions banking the industry, and the need for highly-specialized and compliance-heavy obligations for cannabis banking programs.  Additionally, major card providers Mastercard, VISA, Discover and AMEX will not allow marijuana transactions on their rails, creating a cash-intensive industry.  As a result, financial services have long been a challenge for the state-legal operators.

The Executive Order: Signal vs. Substance

What the Order Signals

The executive order requests only that the rulemaking process for rescheduling be continued, it has been ongoing since 2022, and is best understood first as a political and policy signal:

• It publicly acknowledges cannabis as having medical utility.
• It rejects the logic underpinning Schedule I classification.
• It indicates openness at the highest level of government to continued reform.

For an industry long defined by federal hostility or indifference, this signal matters.

What the Order Does Not Yet Resolve

At the same time, the executive order does not answer several critical questions:

• Timing: When, and under what conditions, will rescheduling actually take effect?  To date, 6 of 9 of the prescribed steps have been completed in the rescheduling process.  With the executive order prompting a restart to that process, step 7, Administration Hearing, is next up, followed by DEA Final Rule, and optional Judicial Review.
• Implementation: How will federal agencies interpret and operationalize the change? It is likely that the Administrative Hearing will shape how the DEA drafts its Final Rule.
• Consistency: Will CBD and/or THC be treated differently?  That’s a big question to be answered!  Will all relevant agencies (DEA, IRS, DOJ, Treasury and banking regulators) align? For example, will FinCEN guidance be updated to reflect the change in scheduling or will Regulatory agencies go right to creating regulatory guidance?
• Durability: How resilient is this change across administrations or legal challenges? There is currently legal action pending which halted the previous Administrative Hearing.  Does that legal action need to be resolved before the rescheduling process can resume?  Will there be other legal challenges to the process?

Until formal rulemaking is completed and agency guidance evolves, uncertainty remains the dominant condition.

Implications for Cannabis Financial Services

Banking and Depository Services

There is a reasonable assumption that moving cannabis to Schedule III could reduce perceived legal risk for banks and credit unions. However:

• Cannabis would remain a federally controlled substance.
• Bank Secrecy Act and AML obligations would not materially change overnight.
• Federal banking regulators have not yet indicated how or if their guidance will evolve.
• The ongoing risk for illicit product sales and money laundering isn’t abated with any of the possible changes.

In short, rescheduling may lower psychological and reputational barriers before it lowers compliance or legal ones.

Payments and Transactional Infrastructure

Similarly, electronic payments and card networks may view rescheduling as a positive signal, but not a green light. Risk committees, acquiring banks, and card brands must move based on regulatory clarity, not political intent.

Without explicit regulatory guidance or statutory protection, payments innovation may remain incremental rather than transformational.

Taxation and the 280E Question

Perhaps the most widely discussed potential impact is the possibility that Section 280E would no longer apply to cannabis businesses once rescheduled.

At this moment, this outcome is not guaranteed.

• The IRS has not yet issued guidance.
• Interpretations may vary based on business activities, product types, or future rulemaking.
• Legal challenges or transitional frameworks could complicate implementation.

It is entirely possible that 280E relief arrives unevenly, slowly, or with caveats that limit its practical benefit.  It is also highly unlikely that past due IRS payments will be forgiven under any scenario.

Compliance and Risk Management

Rescheduling may change risk profiles, but is not going to eliminate them.

Financial institutions should expect:

• A prolonged period where state legality, federal classification, and regulatory guidance remain misaligned.
• Increased scrutiny and confusion as agencies adjust enforcement priorities.
• The need to continuously recalibrate compliance programs rather than simplify them.

In some respects, the transition period will likely temporarily increase complexity.

What We Can Say with Confidence

Despite the uncertainty, several conclusions are reasonable:

1. Federal posture is softening.
   A public move away from Schedule I is a meaningful break from decades of federal prohibition policy.
2. Cannabis is increasingly viewed as a legitimate industry.
   Medical recognition and rescheduling reinforce the industry’s long-term viability.
3. The direction of travel matters.
   Even incomplete reform reduces the likelihood of future regression and enforcement shocks.
4. Financial services engagement is likely to increase.
   Institutions already serving cannabis are unlikely to exit due to this change; many may instead prepare for entering the market, or expanding their existing programs with additional clients and products such as lending.

Strategic Guidance for Financial Institutions

Given what is known and unknown, prudent institutions should:

• Avoid making wholesale assumptions (“this fixes everything” or “nothing changes”).
• Review and update risk assessments and exit planning around possible regulatory outcomes.
• Stay closely aligned with evolving guidance from regulators and industry experts.
• Invest in flexible compliance and monitoring infrastructure that can be easily adapted when final guidance is issued.
• Treat cannabis as a long-term strategic market, not a short-term regulatory trade.

This is the moment for disciplined readiness.

Looking Ahead: A Transitional Era

The executive order does not close the chapter on cannabis reform. It opens a new one defined by ambiguity, negotiation, and gradual alignment.

Future clarity is likely to come from:

• DEA rulemaking and enforcement posture
• IRS interpretation of tax code applicability
• Banking regulator guidance
• Congressional action (or inaction)

Until then, cannabis financial services will continue to operate in a transitional state.  One that is improving, but not yet resolved.

Stay in Touch for Updates and Expert Guidance

Green Check was built to support an evolving industry, and we are always here to offer expert guidance and answer the questions critical to your institution.  You can connect with us here: https://greencheckverified.com/consultation/

Media Contact:

Angie Lufrano

Caliber Corporate Advisers

greencheckverified@calibercorporate.com