💸 The Tape

Safe Harbor Financial (NASDAQ: SHFS) pre-announced one number Tuesday morning, and it's the one that matters for a company whose entire business is routing cannabis cash through partner banks. Trailing 14-day average client deposits hit approximately $119.3 million at September 30, up 7.4% year over year and 9.6% sequentially. That's the highest balance since April 2024, roughly 25% above the May 2025 trough of $95.3 million, and the second straight quarter of acceleration — the third-quarter increase was more than double the second quarter's 4.1%.

The company also quantified a tailwind nobody in cannabis was expecting this year: the Federal Reserve's 25-basis-point hike on September 16 should add roughly $150,000 in annualized investment income on current balances. Small money, but a reminder that Safe Harbor is one of the few cannabis-adjacent public companies that benefits when rates go up.

Why deposits are the metric

Safe Harbor is not a bank. It's a compliance and fintech layer that sits between state-licensed cannabis operators and the credit unions and banks willing to hold their money. The deposits belong to the partner institutions; Safe Harbor earns fees for onboarding and monitoring the accounts and a share of the investment income those balances generate. More deposits mean more fee revenue, more interest-sharing, and — this is the part the company has been building toward under CEO Terry Mendez — a bigger base of clients to cross-sell lending, payments and business services into.

The reason the trailing 14-day average is the disclosed metric rather than a point-in-time balance is payroll. Cannabis operators run two-week cycles, and the balance swings wildly between paydays. Smoothing it out is honest accounting. Comparing it against May 2025, when the stock was fighting for Nasdaq compliance and deposits were at a multi-year low, is honest marketing: the number has turned, and management wants credit for the turn.

What's driving it

Three things, and they're all policy.

First, Schedule III. Since April, state-licensed medical cannabis has been out of 280E, and the GAO's August banking report documented what that does to a bank's risk calculus: the customer stops being a "trafficker in a Schedule I substance" and becomes a regulated pharmaceutical supply-chain participant with a DEA registration number. That's the cleanest piece of due-diligence paper a compliance officer has ever been handed, and it's bringing operators off the sidelines and into formal banking relationships. Safe Harbor is the on-ramp for a lot of them.

Second, consolidation. Mendez has been saying on Trade To Black for months that the shakeout isn't limited to operators — it's reaching the ancillary providers, labs, payroll firms and payment processors who serve them. When a cannabis business gets absorbed by a larger one, its banking relationship often consolidates onto the acquirer's platform. If the acquirer is a Safe Harbor client, the deposits move in. The company's pitch to institutional clients at PBC last month, where its Institutional unit was named top business-solutions company, was exactly that: be the platform the survivors use.

Third, the hemp deadline. With intoxicating hemp products facing federal reclassification on December 11, the banks that were quietly servicing hemp beverage and gummy companies are reassessing. Some of that business is leaving the system; some is migrating to compliance-first platforms built for exactly this kind of regulatory ambiguity. Safe Harbor serves both cannabis and hemp, and its monitoring infrastructure is a selling point when the rules are changing underfoot.

The broader context: banking is still broken

None of this means cannabis banking is fixed. The GAO found that only about 1,000 of 9,000 insured institutions filed marijuana-related suspicious activity reports in 2024 — a number that plateaued in 2019 and hasn't moved since. Operators in the GAO's focus groups described paying $100,000 or more a year for a checking account and borrowing at rates above 15%. Mendez himself told Trade To Black last week that banks still aren't prepared to meet the industry's capital needs beyond real estate lending, that DEA registration may not pencil for every operator, and that uneven DEA site visits are creating confusion in the field.

That's precisely the environment where Safe Harbor's model works. A company that charges for compliance infrastructure does better when compliance is hard and the number of banks willing to do it themselves is small. The risk, of course, is the mirror image: if a safe-harbor law passes, if full rescheduling arrives, and if the big banks decide cannabis is just another regulated industry, the moat shrinks. Mendez's answer has been to move up the stack — lending, payments, institutional services — so that Safe Harbor is a financial platform rather than a SAR-filing service. The deposit growth is evidence clients are willing to follow.

The read

Safe Harbor is a thermometer for cannabis banking, and it just read warmer for the second quarter in a row. The reasons — rescheduling, consolidation, hemp uncertainty — are structural rather than seasonal, which is why the sequential acceleration is the number worth watching. If deposits hold above $120 million through the hemp deadline and the DEA's adult-use decision, the platform story Mendez has been telling since he took the job starts to have numbers behind it. Full results come later this quarter. The preview says the trend is intact.

📈 Dog Walkers

Ascend Opens Store No. 7 in Ohio

Ascend Wellness (CSE: AAWH) (OTCQX: AAWH) opened its newest dispensary in Lewis Center, Ohio, a fast-growing Columbus suburb in Delaware County, with a grand opening set for October 9. It's the company's seventh Ohio store, joining Englewood, Cincinnati, Coshocton, Piqua, Sandusky and Carroll, and it leaves Ascend one license short of the state's eight-dispensary cap per operator.

That math is the story. Ohio adult-use sales are running north of $100 million a month and growing more than 20% year over year, and the per-entity cap means every operator's growth runway in the state is defined by how many of its eight slots it has actually filled. Ascend is at seven. Green Thumb, Curaleaf, Verano and Trulieve's Harvest sidecar are all at or near the ceiling. MariMed, which opened its second Ohio store in Columbus last month, has six slots left. The remaining permits — and the existing stores held by smaller operators who may want out — are the scarce assets in the state, which is why they keep showing up in M&A chatter and why Ayr just handed its Ohio operations to its lenders rather than shut them.

Lewis Center is a smart location. The Powell Road corridor sits in one of the wealthiest and fastest-growing suburbs in the Columbus metro, with a large commuter population and relatively light dispensary density compared to the city's east side. Hours of 8 a.m. to 11 p.m. daily say Ascend expects traffic.

The broader context for Ascend is a company in transition. Stockholders approved a reverse split in August as a prerequisite to a U.S. exchange listing, the balance sheet carries about 2.2x leverage, and management has been pushing its in-house brands — Ozone, Simply Herb, Effin' — harder through its own retail. Seven Ohio stores is a real footprint in the Midwest's best growth market. Filling the eighth, and then deciding what to do with the Michigan business everyone else has fled, are the next questions.

📺 Trade To Black

What Investors Really Think About Rescheduling | TTB Presented by Flowhub

• A legacy brand that survived the feds: Jerome Baker Designs founder Jason Harris on treating glass as art, what made the brand iconic, and living through Operation Pipe Dream — prosecuted for products now sold openly in dispensaries.

• Investors are pricing in Schedule III: ATB Cormark's Fred Gomes breaks down the firm's latest sentiment survey, where investors assigned a 65% probability to full rescheduling within six months, fielded just before the ALJ's stay.

• Uplistings cross the line: For the first time in the survey's history, more than half of respondents — 67% — expect broader U.S. exchange listings, with M&A jumping as a capital allocation priority.

• Consensus picks and an underrated catalyst: Green Thumb and Trulieve lead U.S. longs, Village Farms and Cronos lead Canada, and Gomes argues the federal hemp ban is the catalyst the market is underappreciating.