Cannabis Industry Hopes to Break Free from Financial Isolation with Trump’s Reclassification Order
The cannabis industry, which has grown to an estimated $30 billion in annual revenue, is on the cusp of a major breakthrough. President Donald Trump’s executive order to fast-track the reclassification of cannabis could finally bring an end to the industry’s financial exile.
For nearly two decades, state-licensed dispensaries have been forced to operate in cash, due to the federal government’s classification of cannabis as a Schedule I drug, alongside heroin and LSD. This has made it difficult for businesses to access traditional banking services, secure loans, and process electronic payments.
The reclassification of cannabis, which would move it to Schedule III, along with regulated pharmaceuticals like anabolic steroids and Tylenol with codeine, could change all that. Experts and dispensary operators believe that once cannabis is reclassified, it will be easier for businesses to access traditional banking services, secure loans, and process electronic payments.
Elad Kohen, founder and CEO of The Flowery, a cannabis company with 26 stores across Florida and New York, has had to operate in cash, creating a constant security risk for his employees. “You’re dealing with paper, which makes you a target” for crime, he said. With electronic payment processing, dispensaries would have a more credible and verifiable paper trail, making it easier for banks and lenders to work with them.
The reclassification of cannabis could also make it easier for companies to get financing and grow. “We are not asking for anything special other than being treated like a normal company, having the ability to raise capital like a normal company, be able to fund research like a normal company, and have financial services available to us like a normal company,” Kohen said.
However, there are still obstacles to overcome. Banks are hesitant to serve the cannabis industry due to legal uncertainty, the value of collateral, and concerns about suspicious activities. Additionally, cannabis companies often face higher taxes than other similarly sized businesses, and there are concerns about the high cost of complying with federal reporting rules.
Despite these challenges, the reclassification of cannabis could bring a wave of legitimacy to the industry, attracting responsible capital and paving the way for growth. As Kohen said, “The biggest impact that reclassifying cannabis will have on the industry is the beginning of the complete change of the stigma around cannabis.”
