HHS & DEA Work to Reschedule Marijuana. What Does That Mean for CUs?

Posted by Ryan Fitzgerald on May 7, 2024

In April, news outlets began reporting that the U.S. Department of Health and Human Services and the U.S. Drug Enforcement Agency had agreed to initiate the process of rescheduling marijuana and its derivatives from a Schedule I drug to that of a Schedule III drug on the Controlled Substances Act (CSA), which has numerous impacts on how marijuana and its derivatives are viewed by law enforcement and other government agencies. But does it allow for cannabis businesses to be legally banked without taking specific risk management steps that have been outlined and pioneered by several of our GoWest credit unions, or eliminate the need for the SAFE Banking Act to be passed by Congress? 

The GoWest Advocacy Team has been hearing differing views on the impact rescheduling marijuana would have on the ability for credit unions to serve the legal cannabis industry as well as its employees and other supportive businesses more easily, and we wanted to ensure we shared recent insight from our legal counsel and research completed by the Congressional Research Service. 

Rescheduling Basics 

Currently, marijuana, or cannabis, and all of its derivatives are categorized into two main categories under federal law: marijuana or hemp. The CSA classifies the entire cannabis plant as marijuana under the CSA but provides for exclusions that allow for certain parts of the plants that are non-psychoactive to be legally utilized for other purposes, such as in fabrics or cannabidiol (CBD) oils, and these components are designated as hemp and allowed to be sold and utilized legally.  

Currently, marijuana, the psychoactive component of the plant, is classified as a Schedule I controlled substance under the CSA, which Federal law specifically outlines has “no identified accepted medical use, and is illegal to produce, dispense or possess.” As we know, a vast majority of states have changed their individual laws to permit the use of marijuana for medical purposes, and 24 states have passed laws allowing for recreational use as well, in specific contrast to the staunch federal law, which is has led to the quandary regarding how to legally provide financial services for the industry and supportive services.       

Rescheduling marijuana from a Schedule I drug to a Schedule III would change the stance of the federal government to recognize that marijuana has an accepted medical use and that it may be lawfully dispensed by a pharmacist to individuals with a prescription from a licensed medical professional with prescriptive rights; however, that does not immediately provide legal cover for businesses to begin providing services to this industry. There are still several federal laws that would likely need to be updated before the high level of BSA risk of providing services to this industry were reduced.  

Rescheduling Marijuana Does Not Make it Approved for Recreational Use 

Both Congress and the DEA can make determinations on the scheduling of controlled substances, but simply changing the schedule determination for marijuana does not approve it for recreational use, nor does it automatically make it “safe” for our members to provide banking services for the industry without taking specific risk management steps as previously mentioned. There are a number of laws that would likely need to be adjusted and great deal of detail that federal agencies would need to iron out via rulemaking in order to reduce the legal impacts of changing the serviceability of legal cannabis, with only the rescheduling being adjusted. 

In short, without additional action by Congress to clean-up laws related to the current illegal nature of marijuana, the change in scheduling will not significantly ease the regulatory challenges that currently face financial institutions who want to provide banking services to the legal cannabis industry. In that regard, we want to continue to urge our members of Congress to quickly move forward to pass SAFE or SAFER Banking measures that are currently pending before Congress. GoWest is hopeful that SAFE or SAFER Banking will be passed by the 118th Congress so that we can provide financial services to these industries and ensure public safety in the communities where cannabis has been approved for recreational use.  

Negotiations are currently underway between leaders in both the House and Senate regarding what will be included in a package of bills that will be included in a bipartisan “must pass” package of legislation, and we remain hopeful and will continue to advocate for the inclusion of SAFE / SAFER Banking in a vehicle that will be poised for Congressional passage. The GoWest Advocacy Team will keep advocates up to date in case additional outreach to Congressional offices would help with the final negotiations. 

Posted in Advocacy on the Move, Federal Advocacy.