The Cannabis Banking Crisis That Congress Keeps Ignoring

Congress cuts cannabis banking protections from 2025 bill, leaving legal operators at risk.

The cannabis industry is booming. State by state, legalization has taken root. But the financial infrastructure surrounding this legal market remains frozen in an era of federal prohibition. On September 5, 2025, the House Appropriations Committee once again advanced a key spending bill without protections for banks serving cannabis businesses. It marked yet another instance where Congress talked reform, then walked it back. For cannabis entrepreneurs, hemp growers, and even regional banks trying to follow the rules, the message was chillingly clear: proceed at your own risk.

Congress Strips Banking Protections—Again

At the center of the current flashpoint is the Financial Services and General Government (FSGG) appropriations bill. Stripped from this year's version was language that would have provided “safe harbor” for financial institutions working with cannabis and hemp businesses that are legal under state or federal law. These protections, known broadly as the SAFE and SAFER Banking Acts, have been fixtures of cannabis reform discussions for nearly a decade. And yet, they remain as elusive as ever.

Representative Betty McCollum (D-MN) didn’t mince words during markup of the FSGG bill. She criticized the removal of banking protections, emphasizing the harm it causes hemp businesses operating fully within federal law. Unlike cannabis, which remains a Schedule I controlled substance, hemp was federally legalized under the 2018 Farm Bill. Yet banks, wary of entanglement in the broader cannabis sector, often turn away hemp clients too. This leaves them in the same cash-dependent limbo as their THC-rich cousins.

The Risks of a Cash Economy

Operating in cash isn't just inconvenient. It's dangerous. It invites robbery, complicates tax compliance, and shrouds the industry in financial ambiguity. In Arizona, where recreational cannabis has been legal since 2020, the consequences are acutely felt. Dispensaries employ armed guards and armored transport. State tax agencies issue elaborate guidance on how to remit millions in cash. It's a kludged-together workaround that no serious industry should have to tolerate.

Banks Want In—But Need Clarity

The irony is that many financial institutions want to serve the cannabis market. Banks and credit unions have voiced support for reform, noting the profitability and legitimacy of state-licensed businesses. What they lack is certainty. Without explicit federal protections, they risk penalties ranging from fines to charter revocation. Even with FinCEN guidance and murky tolerance from regulators, most banks see the cannabis sector as radioactive.

The SAFE Banking Act, and its successor the SAFER Banking Act, were designed to change that. They would shield banks from liability, allow access to services like credit cards and loans, and lift the industry out of its cash-only purgatory. Versions of these reforms have passed the House multiple times, often with bipartisan support. But in the Senate, they've consistently stalled, often stripped out during appropriations negotiations like the one just witnessed.

A National Safety and Compliance Issue

In July 2025, 32 state attorneys general penned a letter urging Congress to pass the SAFER Banking Act. Their rationale was simple: public safety and regulatory compliance depend on normalizing the financial side of cannabis. When state prosecutors and law enforcement are making the case for reform, it speaks volumes about how untenable the current system has become.

Critics of cannabis reform argue that piecemeal legislation like SAFE or SAFER sidesteps the bigger issue: federal legalization. And they're not wrong. The disconnect between state legality and federal prohibition remains the core conflict. But while full reform remains a political long shot, banking protections offer a practical interim step. They would reduce crime, enhance transparency, and let small businesses operate like, well, businesses.

The Arizona Market Feels the Impact

For cannabis operators in Arizona, the stakes are more than theoretical. The state boasts a mature, regulated market with a mix of MSOs and local startups. Yet these businesses face immense hurdles simply accessing checking accounts or payroll services. Arizona’s Department of Revenue has worked to streamline compliance, but the cash burden is real. For consumers, this often means higher prices and fewer payment options.

Some local credit unions have tiptoed into the space, offering limited services under strict guidelines. But without federal safe-harbor, these efforts remain niche. Larger institutions that could bring scale and stability are holding back. Meanwhile, Arizona's cannabis economy continues to expand, generating tax revenue and jobs—yet locked out of the basic financial ecosystem.

The Industry’s Legitimacy, Questioned by Inaction

There is also a cultural hypocrisy at play. Cannabis is increasingly normalized in media, medicine, and markets. From celebrity brands to Wall Street investments, weed has gone mainstream. Yet when it comes to fundamental operations like opening a bank account or securing a loan, businesses are treated like outlaws. It's a dissonance that undermines both the legitimacy of the industry and the credibility of the regulatory framework.

What’s Next for SAFER Banking?

The removal of cannabis banking protections from the 2025 FSGG bill is not just a procedural blip. It's a reflection of political inertia, ideological divides, and a Congress still unwilling to reconcile law with reality. For businesses in Arizona and across the country, the costs are mounting. Until Congress acts, cannabis will remain a cash business in a cashless world—vulnerable, opaque, and needlessly risky.

The SAFER Banking Act remains in play. Advocates are regrouping, state officials are lobbying, and public pressure is building. But the clock is ticking. Every legislative session that ends without reform is another year of risk for businesses playing by the rules. As the cannabis market matures, its infrastructure must too. Banking is not a luxury; it's a necessity.

Arizona’s Cannabis Businesses Push Forward

In the meantime, Arizona businesses will keep doing what they’ve always done: adapt, comply, and push forward. They’ll count cash behind closed doors, transport it under guard, and hope that next year brings the clarity they need. And CIGAWEEDS, like others in the community, will keep spotlighting these contradictions, because progress doesn't come from silence. It comes from telling the truth until the truth becomes impossible to ignore.

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