WASHINGTON — In a move that could significantly reduce the risks faced by financial institutions when serving cannabis businesses, President Trump has signed an executive order directing the U.S. Department of Justice to complete the long-delayed process of rescheduling marijuana under federal law.
The move marks the most significant shift in U.S. drug policy since the Controlled Substances Act was enacted more than five decades ago, but it does not mean legalization.
Instead, the order instructs the Justice Department, in coordination with the Drug Enforcement Administration, to finalize a rule moving cannabis out of Schedule I — the most restrictive category reserved for substances deemed to have no accepted medical use and a high potential for abuse. Marijuana is currently classified alongside heroin and LSD.
What Order Does Not Do
The White House emphasized that in addition to not legalizing marijuana at the federal level, the order also does not create a nationwide cannabis market. Instead, it would formally recognize medical use under federal law and ease penalties tied to cannabis-related activity.
For banks and credit unions, the shift could be consequential.
Reducing Risk
According to industry analysts, rescheduling marijuana would significantly reduce legal risk for financial institutions that serve state-licensed cannabis businesses, which currently operate in a gray area. While marijuana remains illegal federally, many banks and credit unions have avoided the sector out of concern that providing accounts, loans or payment services could trigger money-laundering charges or regulatory penalties.
Access Could be Expanded
Moving cannabis to a lower schedule would weaken the legal foundation for those concerns, compliance experts say, and could expand access to basic financial services such as deposit accounts, payroll processing and credit.
The change would also ease restrictions under federal tax law that prevent cannabis companies from deducting ordinary business expenses, improving profitability and potentially lowering credit risk for lenders.
Pot Remains Illegal
However, the executive order stops short of providing full legal clarity for financial institutions. Marijuana would still be illegal under federal law, and regulators would still expect banks and credit unions to maintain enhanced due diligence, transaction monitoring and reporting.
Industry groups have long argued that only congressional action — such as passage of a cannabis banking “safe harbor” law — can fully protect financial institutions from liability. The order does not address that issue.
Federal banking regulators have not yet issued guidance on how rescheduling would affect examination standards or enforcement priorities.
The Justice Department is expected to finalize the rescheduling rule in the coming months, following a public comment period already completed earlier this year.
