💸 The Tape

The Government Accountability Office spent two years, 74 financial institutions, 51 cannabis operators and fifteen trade groups answering a question the industry could have answered in a sentence: can a state-licensed cannabis business get a bank account? The report, delivered August 7 to Senators Warren, Warnock, Smith and Fetterman, lands on "yes, barely, and it'll cost you." But the value isn't in the conclusion. It's in the numbers, the incentives, and what the document reveals about where normalization actually comes from.

The banking side: a plateau, not a trend

The single most important chart in the report shows the number of banks and credit unions filing marijuana-related suspicious activity reports. It climbed every year from 2015 to 2019, then flatlined. In 2024, roughly 1,000 institutions filed at least one "Marijuana Limited" or "Marijuana Priority" SAR — about 11% of the 9,000 insured depositories in the country. Roughly 800 of those filed continuing-activity reports, meaning they had ongoing cannabis customers rather than one-off transactions.

Read that plateau carefully. The institutions willing to bank cannabis under the 2014 FinCEN framework all showed up by 2019. Nothing since then — not state legalization spreading to 24 states, not SAFE Banking passing the House seven times, not a decade without a single enforcement action — has moved the number. The GAO confirms that last point explicitly: it found no instance of a financial institution being penalized solely for serving a cannabis business, and none of the regulators, associations or dozens of banks it interviewed could name one either.

So the banks that don't serve cannabis aren't avoiding a demonstrated risk. They're avoiding a theoretical one, plus a very real compliance bill. The report's own data on who's still filing suggests some of those 1,000 institutions only touch ancillary businesses — law firms, landlords, marketing shops — not anyone with a plant.

The regulatory vacuum

Here's the part that should embarrass Washington. The only federal guidance on banking cannabis is FinCEN's 2014 memo, which is built on the enforcement priorities of the 2013 Cole Memo — a document the Justice Department rescinded in 2018. The four banking regulators have issued nothing of their own. They "neither encourage nor discourage" cannabis banking, and when a bank asks for clarity, they point it back to FinCEN, which points it back to the 2014 guidance. The examiner manual mentions cannabis in two footnotes. Two of the four regulators have trained examiners on the topic; two haven't.

Banks are being asked to underwrite a $30 billion legal industry using a twelve-year-old memo that references a policy the government abandoned eight years ago. That's not a risk framework. It's an institutional shrug, and the SAR plateau is what a shrug looks like in data.

The cannabis side: the cost of being half-banked

For operators, the report reads like a bill. Owners described monthly and annual account fees, with two participants paying $100,000 or more per year just to keep a checking account. Every bank that serves cannabis confirmed it charges the sector more than other customers. Account opening takes weeks or months. Closures come with little warning, sometimes because a compliant bank gets acquired by one that isn't.

Credit is worse. Operators in seven of eight focus groups cited loan rates above 15%, against a Fed survey showing small businesses generally borrowing at 7.4% to 7.9%. When banks won't lend, operators turn to private lenders whose terms, in the GAO's diplomatic phrasing, "could allow them to take control of the business." Anyone who has watched the sector's debt-for-equity cycle knows exactly what that sentence means.

Payments remain the deepest wound. Visa and Mastercard still prohibit cannabis transactions, so the industry runs on cash, ACH workarounds and cashless ATMs that the card networks consider rule violations and that "frequently stop working without warning." The GAO notes, with a straight face, that the Electronic Transactions Association's position is that the networks will not change policy short of federal legalization. Not rescheduling. Not SAFE Banking. Legalization.

And it follows people home. About half of the owners polled said they or their employees had trouble with personal bank accounts and loans. Participants in seven of eight groups reported employees denied mortgages because of where they work. Some banks won't count cannabis income at all. Two banks that refuse cannabis businesses said they'd bank the employees but not the owners.

The backdrop makes all of this sharper. Licensed cannabis businesses peaked at 27,852 at the end of 2022 and had fallen to 21,760 by the end of 2025. The industry is consolidating under the weight of exactly these costs.

What a safe harbor would and wouldn't do

The GAO polled banks on SAFE-style legislation, and the answers are more useful than the lobbying has been. Among institutions that don't serve cannabis, 20 of 25 said a safe harbor would change what they'd be willing to do. Among those that already serve cannabis, 22 of 29 said it wouldn't change their services — though several said it would unlock lending.

Then the caveat that matters: across seven of nine focus groups and eight of 11 interviews, banks said what would really move them is a reduction in compliance burden — fewer SARs, lighter due diligence. Liability protection without compliance relief buys less than the industry assumes. And multiple banks said nothing short of full legalization changes their policy at all.

Where rescheduling enters

The report was researched under Schedule I and published under a split regime, and the seams show. Since the DOJ's April 23 final rule, cannabis sold under a state medical license is Schedule III, which the rule itself notes removes those licensees from Section 280E. The DEA administrator went further, encouraging Treasury to consider retroactive 280E relief for prior years, and Treasury has promised guidance. Adult-use remains Schedule I pending the administrative law judge's recommendation from the July hearing. Litigation from Smart Approaches to Marijuana is pending in the D.C. Circuit.

The GAO is careful here, and correctly so: a cannabis banking association told it that rescheduling doesn't make cannabis federally legal, and BSA obligations don't disappear. Every SAR still gets filed. But the same source said some banks would see "a perceived reduction in risk," and a few non-serving institutions predicted rescheduling would significantly change their policies.

That's the mechanism. Normalization in banking doesn't come from a single statute; it comes from stacking reasons for a risk committee to say yes. Rescheduling stacks three at once. First, Schedule III is the same tier as ketamine and testosterone — substances banks lend against every day — which reframes the customer category from "illegal drug trafficker" to "regulated pharmaceutical supply chain." Second, the 280E fix converts operators from tax-distressed borrowers into businesses with real after-tax cash flow, which is what underwriting actually runs on. Third, a DEA-registered medical operator is a customer with a federal license number, which is the cleanest due-diligence document a compliance officer has ever been handed.

Layer a safe harbor on top and the 2014 guidance finally gets a successor with lighter filing requirements, the lending taps open at the 1,000 banks already in the market, and a meaningful share of the other 8,000 have cover to enter. Full rescheduling of adult-use extends the same logic to the whole industry. And the hemp definition change taking effect November 12 removes the competitor the GAO flagged — hemp operators that bank freely and accept cards while selling functionally identical products.

The bottom line

The GAO wrote a report about a problem that regulators created by neglect and that Congress has declined to fix for a decade. Its most useful finding is that the fix isn't one bill. It's a sequence: reschedule to reframe the risk, relieve 280E to fix the credit profile, pass a safe harbor to cut the compliance cost, and let the card networks follow legalization when it comes. Each step moves the SAR plateau up. Together, they turn cannabis from a category banks tolerate into one they compete for — which, for an industry paying $100,000 a year for a checking account, is the whole game.

📈 Dog Walkers

$LOVFF ( ▲ 0.14% ) Raises $80M from BMO

While the GAO was busy explaining why American cannabis operators pay $100,000 a year for a checking account, Cannara Biotech (TSX: LOVE) (OTCQX: LOVFF) just showed what the other side of the border looks like. The Québec producer announced an amended $80 million syndicated credit facility with Bank of Montreal and TD Bank — a $30 million increase over the roughly $50 million it had access to before, with cheaper borrowing costs and a maturity pushed out two years to December 31, 2029.

The structure splits evenly: a $40 million term loan that refinances the existing term loan, capex facility and revolver, with the balance earmarked for the Valleyfield build-out, and a $40 million committed revolver, up from $10 million, for working capital. BMO stays on as agent and sole bookrunner; TD joins as co-lead arranger, which is the real headline. Two of Canada's Big Five now underwrite a cannabis grower on conventional secured terms, and the covenants were loosened specifically to fund expansion rather than restrict it.

That expansion is the point. Cannara is building a post-processing centre designed for EU-GMP certification and activating additional cultivation zones at Valleyfield to keep up with demand it says it can't fully meet. With two facilities totaling 1.6 million square feet and Québec hydro rates, it already runs one of the lowest-cost production models in the country; EU-GMP turns that cost advantage into an export business at a moment when Germany, Australia and the UK are absorbing every gram of certified Canadian flower they can get.

CEO Zohar Krivorot called the deal an endorsement of disciplined, profitable growth. That's fair. Cannara has spent three years compounding revenue, initiated a buyback in August, and just installed a new CFO in Nicholas Fozard as Niko Sosiak moved fully into the COO seat.

The contrast is the story. American operators are waiting on Schedule III and a safe harbor to get a bank to return their calls. Cannara has two of them competing to lend it money.

📺 Trade To Black

Court Rejects Bid to Freeze Cannabis Rescheduling | TTB Presented by Flowhub

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