The U.S. Government Accountability Office (GAO) released a comprehensive study this week detailing the persistent financial challenges faced by cannabis‑related businesses (CRBs) across the country. Drawing on data from the Financial Crimes Enforcement Network (FinCEN), the report shows that most banks remain hesitant to serve CRBs, citing potential legal and regulatory risks.
Federal tax code adds to the burden
Under Internal Revenue Code Section 280E, businesses that deal with Schedule I or II controlled substances are prohibited from deducting ordinary business expenses on federal tax returns. The GAO notes that CRB owners consistently cite this restriction as a major obstacle to profitability and growth.
Banking restrictions persist
The report outlines several ways banks limit services for CRBs. Many institutions close accounts, impose high maintenance fees, and charge elevated interest rates on loans. In 2024, roughly 1,000 CRBs filed suspicious activity reports (SARs) after transactions triggered FinCEN alerts.
Major card networks—including Visa, Mastercard, American Express, and Discover—continue to block transactions involving CRBs because cannabis remains classified as a Schedule I drug. Financial institutions told GAO that the threat of legal sanctions and potential fines discourages them from offering full banking services.
While the GAO could not confirm any enforcement actions taken solely for serving CRBs, federal banking regulators indicated they have not pursued penalties against supervised institutions for providing those services.
Limited lending and ancillary services
Some banks that do work with CRBs restrict their product offerings. Several do not provide international wire transfers or loan programs tailored to the cannabis sector. Industry representatives explained that lending to CRBs is risky because the federal government could seize collateral used to secure a loan.
CRB owners also reported that banking constraints hinder broader business expansion and affect personal finances. Difficulty obtaining car loans, mortgages, or life insurance was frequently mentioned.
Congressional interest
Senators Elizabeth Warren (D‑Mass.), Raphael Warnock (D‑Ga.), Tina Smith (D‑Minn.) and John Fetterman (D‑Pa.) have requested additional information on the status of CRBs and related banking regulations. The GAO highlighted that the conflict between federal and state law continues to create obstacles for CRBs seeking basic financial services.
Congress has considered, but not yet passed, legislation that would provide safe‑harbor protections for financial institutions that serve state‑licensed CRBs. Such measures aim to reduce the regulatory uncertainty that currently deters banks from working with the industry.
What this means for the cannabis sector
Despite expanding state legalization, the federal stance on cannabis remains a significant impediment to the industry’s financial stability. The GAO report underscores the need for clear legislative action to reconcile federal tax and banking rules with the growing legitimacy of cannabis businesses at the state level.
Original reporting: KTBS 3 (Shreveport) — read the source article.
