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The State of Cannabis Banking for 2026: Rescheduling and the Future of Financial Compliance
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The State of Cannabis Banking for 2026: Rescheduling and the Future of Financial Compliance

Introduction to the Discussion

Overview of Participants

  • Chris Van Djk introduces himself and Stephen Kemerling, highlighting their shared experiences at cannabis banking conferences.
  • Chris emphasizes Stephen's reputation as a trusted source of information in the cannabis banking sector, setting the stage for a timely discussion on hemp.

Introduction of CRB Monitor

  • Stephen Kemerling introduces himself as the founder and CEO of CRB Monitor, established in December 2014.
  • He explains that CRB Monitor aims to assist regulated financial institutions in adhering to FinCEN's marijuana banking guidance, which is now over a decade old.

CRB Monitor's Database Functionality

Key Features of CRB Monitor

  • The platform aggregates regulatory data on marijuana business operators, including licensing details and enforcement actions across the U.S. and Canada.
  • It focuses on providing detailed beneficial ownership data and monitoring changes in license status for clients primarily consisting of regulatory depository institutions.

Distinction from Other Analytics Firms

  • Stephen clarifies that CRB Monitor does not engage in cash analytics but rather concentrates on firmographic data essential for compliance and verification purposes.

Chris Van Djk’s Background

Professional Journey

  • Chris shares his background as a former financial regulatory attorney with six years at Maine's Bureau of Financial Institutions before transitioning to general counsel for a financial institution in September 2014.
  • He recounts how he was asked about cannabis programs during his interview, reflecting the growing interest and concern around cannabis banking.

Development of Cannabis Banking Programs

  • Chris discusses how his institution became one of the few willing to engage with cannabis banking, leading to significant revenue generation despite initial risks involved.
  • He mentions joining Cogent Law two years ago to assist financial institutions navigating cannabis banking challenges, including expansion into lending or remediation efforts.

Discussion on Hemp Regulations and Industry Challenges

Introduction to the Discussion

  • The speaker discusses inefficiencies in a legal context, emphasizing the need for advice on creating efficiencies while remaining compliant with examiners.
  • The speaker introduces themselves as a source of guidance for clients regarding CRB (Compliance Review Board) issues, highlighting their commitment to quick responses.

Overview of Cogent Law Firm

  • The speaker shares their background at a large corporate firm in Toronto, Canada, expressing relief at not returning to that environment due to its pressures.
  • They describe Cogent as client-focused with no billing quotas or high expectations, offering services at reasonable rates.

Current State of Hemp Regulations

  • The discussion shifts towards recent developments in hemp regulations following the November spending bill, indicating uncharted waters for the industry.
  • Steve is invited to share insights about the hemp ban included in the appropriations bill and its implications.

Clarification on Hemp and Cannabinoids

  • It is clarified that while certain intoxicating hemp-derived cannabinoids are banned, general hemp cultivation remains legal under USDA oversight.
  • The conversation highlights how entrepreneurs have created intoxicating products from hemp that were previously unconsidered as such.

Impact of Recent Legislation

  • States like Tennessee and Texas are mentioned as being friendly towards hemp but facing challenges due to rapid growth in intoxicating hemp products.
  • A federal-level change has effectively outlawed these intoxicating products through language tucked into an appropriations bill.

Industry Growth and Banking Challenges

  • The unintended consequences of legislation have led to a burgeoning market for THC-infused hemp products which now poses regulatory challenges.
  • There’s acknowledgment of a gap created by previous legislation (2018 Farm Bill), allowing industries to flourish without clear regulation on non-delta 9 THC cannabinoids.

This structured summary captures key discussions around the evolving landscape of hemp regulations and industry dynamics while providing timestamps for easy reference.

Understanding the Current State of Hemp and Marijuana Regulations

Risk Assessment in Banking for Hemp vs. Marijuana

  • Banks view marijuana as a higher risk compared to hemp, with more stringent compliance requirements such as rolling SAR filings and enhanced due diligence.
  • Credit unions with hemp programs should form working groups to monitor regulatory changes closely, as the situation is currently unstable.

Legislative Changes Impacting Hemp Products

  • There are ongoing attempts to reverse recent provisions that significantly restrict hemp products, particularly those introduced by Mitch McConnell.
  • The legalization of hemp in 2018 primarily led to a surge in CBD production, which accounted for approximately 80-85% of hemp grown during that period.

Market Dynamics and Product Derivatives

  • The market for hemp has largely revolved around derivative products like CBD rather than raw hemp itself; without these derivatives, there is little incentive for farmers to grow hemp.
  • Economic factors dictate that if end markets for derivative products diminish, the demand for growing hemp will also decline. Thus, it’s not just about banning hemp but banning its derived products that affects the market.

Banking Perspectives on Cannabis Products

  • Different banks have varying policies regarding cannabis banking: some refuse to bank any cannabis-related businesses while others may only engage with specific segments like cannabinoid-derived products from hemp.
  • The lack of federal regulation on marijuana complicates banking relationships; many banks remain hesitant due to concerns over compliance and legality issues surrounding unregulated or variably regulated products.

Future Outlook on Regulation and Compliance

  • Recent legislative efforts aim to transition from outright bans on certain cannabinoids back towards regulation; this includes a new bill proposed by Senators Wyden and Merkley aimed at regulating hemps' cannabinoid derivatives.
  • As states continue developing their own marijuana regulations despite federal illegality, it is likely that intoxicating hemps will be integrated into existing state cannabis licensing frameworks over time. This shift could require additional compliance efforts from banks involved in cannabis financing moving forward.

The Future of the Hemp Industry: Regulatory Challenges and Opportunities

Current State of the Hemp Industry

  • The speaker expresses skepticism about the hemp industry disappearing, suggesting that regulatory changes are imminent within a year.
  • A new bill introduced by Oregon senators aims to address current regulatory issues in the hemp sector.
  • Senator Rand Paul has proposed legislation to eliminate federal preemption, allowing states to regulate hemp independently.

Implications of Regulatory Changes

  • A one-year waiting period before a potential ban could provide regulators (FDA and DEA) time to create rules that may mitigate the impact of such a ban.
  • Financial institutions should proactively manage risks associated with their hemp portfolios rather than waiting for regulations to change.

Risk Management Strategies for Financial Institutions

  • Chief risk officers should identify and categorize accounts related to hemp, distinguishing between intrastate and interstate operations due to differing risk levels.
  • Communication with hemp customers is crucial; institutions should inform them about ongoing monitoring of regulatory developments.

Considerations for New Accounts

  • Institutions might consider temporarily freezing new hemp account openings as a precautionary measure amid uncertain regulations.

Broader Market Dynamics

  • The discussion highlights significant financial risks tied to interstate versus intrastate business models in the hemp market, emphasizing economic implications if bans are enforced.
  • The conversation notes that while marijuana businesses face state-to-state licensing challenges, similar hurdles could arise for interstate hemp operations if federal regulations tighten.

Enforcement Perspectives

  • There is skepticism regarding robust federal enforcement from agencies like the DEA and FDA even if laws change, suggesting that enforcement priorities may not focus on these industries immediately.

Will FinCEN Update Its Marijuana Banking Guidance?

Current Stance on FinCEN's Guidance

  • The speaker expresses skepticism about FinCEN updating its marijuana banking guidance, suggesting that internal discussions indicate regret over the original guidance due to backlash.
  • It is noted that FinCEN prefers not to take ownership of the guidance and has faced significant criticism for it.

Interagency Guidance on Hemp Banking

  • There is existing interagency regulatory guidance from the Federal Reserve, OCC, and FDIC regarding hemp banking issued around 2020 or 2021.
  • The speaker anticipates no updates from FinCEN but expects potential revisions in interagency guidance.

Criticism of Existing Guidance

  • The current FinCEN guidance is criticized for being outdated (over 11 years old), especially as the number of states with legal cannabis programs has increased significantly.
  • James Cole, author of the Cole memorandum, publicly lamented how his memo led to restrictive banking practices for cannabis despite its intent.

Legal Implications and Future Considerations

  • Questions arise about whether there is a need for FinCEN to revise its guidance given changes in legislation affecting hemp and cannabis classification.
  • Banks should prepare their risk departments for potential changes in how they handle accounts related to hemp products.

Differentiating Hemp Products

  • The discussion emphasizes that while hemp may not be legally redefined as marijuana, it will receive similar treatment under regulations concerning THC content.
  • Clarification is made regarding differentiating between intoxicating hemp products and non-intoxicating ones, suggesting a more accurate terminology like "IHP" (Intoxicating Hemp Products).

Compliance Recommendations

  • Financial institutions are advised to treat accounts related to IHP similarly to licensed cannabis-related businesses (CRBs), including necessary reporting requirements.
  • Overreporting on suspicious activity reports (SAR filings) is encouraged as a precautionary measure rather than risking underreporting.

Risk Management Considerations for Financial Institutions

Importance of Filings and Guidance

  • The speaker emphasizes the need for financial institutions (FIs) to consider risk management strategies, particularly regarding filings.
  • There is a discussion about Finson guidance being the closest reference point for regulatory compliance, despite its limitations compared to marijuana regulations.

Legislative Uncertainty and Its Impact

  • The conversation highlights that regulatory bodies like the Federal Reserve or FDIC may delay guidance until they see outcomes from pending legislation related to cannabis.
  • The Safe Banking Act could necessitate updates in FFIC guidance, potentially benefiting the cannabis industry by providing clearer regulations.

Evolving Perspectives on Hemp Regulation

  • The speaker argues that hemp-derived products should be regulated similarly to marijuana due to their similarities, advocating for a unified approach under cannabis regulation.
  • A key concern raised is the timeline for these changes and how current exposure assessments are crucial for FIs dealing with hemp-related businesses.

Risks Associated with Regulatory Delays

  • There is a warning about potential scenarios where banks might have to sever ties with clients if federal laws do not align with state regulations, creating significant risks.
  • The discussion acknowledges that banks could find themselves managing portfolios that include federally illegal operations, posing serious BSA compliance issues.

Communication Strategies and Future Outlook

  • Emphasis is placed on early communication with hemp members about potential risks without spreading panic; proactive engagement is encouraged.
  • The speakers contemplate writing an article outlining possible outcomes based on legislative developments and emphasize the importance of timing in regulatory responses.

Financial Exposure Analysis

  • Concerns are raised regarding financial institutions banking industries that may remain federally illegal post-November 2026, highlighting a critical need for strategic planning.
  • It’s suggested that banks should prepare Q&A resources to address concerns from clients while monitoring ongoing legislative changes closely.

Lending Risks in Hemp Ecosystem

  • Discussion shifts towards lending practices within the hemp sector, stressing the importance of assessing exposure related to depository accounts and equipment financing.
  • Banks must evaluate their lending relationships tied to processing equipment and warehouses used in hemp production as part of their risk management strategy.

Financial Risks in Cannabis Lending

Overview of Financial Risks

  • The discussion highlights the need for increased scrutiny on lending practices within the cannabis industry, particularly regarding financial institutions offering loans to hemp-related businesses.
  • Emphasis is placed on reviewing loan documentation closely, including covenants that may allow lenders to call loans under certain conditions.

Compliance and Regulatory Considerations

  • The conversation shifts to compliance risks associated with the Bank Secrecy Act (BSA), indicating that these risks are intertwined with financial risks in lending.
  • The Safe Banking Act is introduced as a potential legislative measure aimed at providing safe harbor for regulated financial institutions banking cannabis-related businesses.

Legislative Landscape

  • Discussion reveals that the Safe Banking Act has been stalled in Congress for several years, despite bipartisan support and ongoing speculation about its passage.
  • Current political dynamics are noted as factors contributing to the delay, with other pressing issues overshadowing cannabis legislation.

Rescheduling and Its Implications

  • The topic of rescheduling marijuana is raised, referencing comments made by Trump regarding potential changes but noting a lack of follow-up or action from the administration.
  • Speculation around descheduling marijuana is mentioned, highlighting inconsistent messaging from government officials about future actions.

Political Insights and Predictions

  • Personal opinions are shared regarding the likelihood of rescheduling or descheduling occurring before upcoming elections, suggesting it could be a strategic move for gaining voter support.
  • Acknowledgment that while descheduling might appeal to voters, it raises questions about how it aligns with recent legislative actions against hemp.

Conclusion on Cannabis Banking Changes

  • It’s concluded that even if rescheduling occurs, significant changes in cannabis banking practices may not happen until updated guidance from FinCEN is issued.
  • Communication with cannabis customers about these developments is deemed crucial to prevent confusion over their banking status post-rescheduling.

Discussion on Cannabis Rescheduling and Banking Implications

Overview of Cannabis Rescheduling

  • The speaker reflects on the need for banks and credit unions to prepare for potential changes in cannabis regulation, recalling a previous expectation of rescheduling marijuana.
  • Offers assistance in drafting communications to customers regarding regulatory changes, anticipating confusion surrounding the topic.

Safer Banking Legislation

  • Discussion on the "Safer Banking" bill, which could trigger a review by FinCEN and FFIEC, with hopes that it will simplify SAR filing processes for banks.
  • Despite potential legislative changes, cannabis is expected to remain a high-risk industry; current KYC monitoring practices are unlikely to change significantly.

Risk Management Strategies

  • Emphasizes the importance of stress testing loan portfolios due to exposure risks associated with cannabis lending.
  • Acknowledges uncertainty in future regulations but stresses proactive risk management as essential for financial institutions involved with cannabis.

Impact of Rescheduling on Regulation

  • Responding to audience questions about how rescheduling might affect adult-use states' regulations; suggests increased federal oversight seems likely.
  • Clarifies that rescheduling would move cannabis from Schedule I to Schedule III but does not directly impact product usage or banking requirements.

Existing Guidance and Future Predictions

  • The speaker expresses skepticism that rescheduling will alter existing FinCEN guidance or banking operations significantly.
  • Both speakers agree that moving cannabis to Schedule III does not equate to it being an FDA-approved drug, maintaining its status as federally illegal from a regulatory standpoint.

Long-Term Regulatory Outlook

  • Discusses the complexities involved in transitioning marijuana into an FDA-reviewed category; emphasizes that significant time will be required before any regulatory framework is established.
  • Highlights ongoing challenges even if rescheduled; reiterates that from a compliance perspective, little may change immediately after rescheduling occurs.

Conclusion and Final Thoughts

  • Concludes with reflections on potential benefits of rescheduling while acknowledging persistent risks; thanks participants for their insights and engagement.

Contact Information and Offer for Discussion

Providing Contact Details

  • The speaker shares their cell phone number, 207844196, indicating a willingness to engage with others.
  • They express openness to receiving questions, concerns, or comments from the audience.
  • The speaker offers to provide insights from an ex-regulator's perspective if needed by boards or individuals.
Video description

As the cannabis industry stands on the brink of federal change, financial institutions face new questions about risk, regulation, and opportunity. With the DEA’s pending rescheduling decision (and whispers of full descheduling), banks, credit unions, and compliance professionals must navigate a rapidly evolving landscape that could redefine cannabis and hemp banking. Join Chris Van Dyck, Attorney at Cogent Law, and Steven Kemmerling, Founder & CEO of CRB Monitor, for a live 60-minute discussion exploring how federal developments, state action, and ongoing regulatory uncertainty are reshaping the future of cannabis finance. This session will unpack what rescheduling could mean for FinCEN guidance, how intoxicating hemp continues to blur compliance lines, and where financial institutions can find opportunity in the midst of regulatory ambiguity. The conversation will feature a fireside-style discussion with limited slides, offering candid insights from two leading voices in cannabis compliance and financial regulation. Attendees Will Learn What federal rescheduling and potential descheduling could mean for financial institutions and cannabis-related businesses (CRBs) Whether these changes might prompt FinCEN to revise its long-standing guidance Why the SAFER Banking Act may not be the regulatory fix many expect How FFIEC provisions could shape examiner expectations and compliance frameworks in 2026 Why intoxicating hemp products have created new compliance headaches, and how institutions can manage the risk How the 2018 Farm Bill loophole and the pending Farm Spending Bill impact hemp regulation and enforcement The latest state-level developments, including Governor Abbott’s Texas hemp executive order, influencing banking policy nationwide Practical strategies for mitigating risk and maintaining compliance amid uncertainty Register Now Who Should Attend Compliance officers and BSA professionals Bank and credit union executives Policy analysts and legal advisors Cannabis and hemp industry service providers Financial technology and RegTech professionals Meet the Speakers Steven Kemmerling Founder & CEO, CRB Monitor Steven Kemmerling is the Founder and CEO of CRB Monitor, the leading RegTech platform for cannabis-related business intelligence and compliance. With a database covering over 80,000 private cannabis businesses, 212,000 licenses, and 137,000 decision-makers, CRB Monitor serves as the single source of truth for financial institutions navigating the cannabis sector. Steven pioneered the industry’s risk-tiering framework, first introduced in his 2016 ACAMS Today white paper Defining Marijuana-Related Businesses, which has since become the standard used by banks and regulators nationwide. Before founding CRB Monitor, Steven worked as an M&A investment banker and securities litigation consultant. Chris Van Dyck Partner, Cogent Law Chris Van Dyck is a regulatory attorney and former BSA Officer with nearly a decade of experience in cannabis banking. As a Partner at Cogent Law, he advises financial institutions on structuring and managing compliant cannabis banking programs that mitigate risk while driving growth. Chris previously led one of the nation’s most successful cannabis banking initiatives, turning compliance into a competitive advantage and major revenue stream. His work bridges policy, operations, and strategy, helping clients adapt to the ever-evolving intersection of law, regulation, and financial technology.