The news: The White House issued an executive order reclassifying cannabis from a Schedule I to a Schedule III controlled substance—a lower-risk category that puts it on the same plane as some controlled prescription medications. The order’s focus is to encourage medical research on marijuana and stops short of endorsing recreational use. Federal penalties for cannabis possession and distribution will remain in place.

Trendspotting: The executive order accelerates a trend at the federal level. Last year, the Drug Enforcement Administration proposed a rule that would reclassify cannabis as a Schedule I narcotic. Congressional action via the SAFER Banking Act ( intended to protect banks that serve legal cannabis-related businesses from penalties) has stalled. In the meantime, banks in the cannabis business are no better off.

Guidelines published under the Obama administration on Bank Secrecy Act expectations for financial institutions (FIs) that serve “marijuana-related businesses” reminded FIs that even if cannabis is legal under state law, it is not under federal law. The legal status of cannabis at the federal level hasn’t changed, and regulatory guidance still applies.

Our take: The US legal cannabis industry is worth $35 billion and served by at least 800 FIs. Even benign transactions that involve cannabis-related businesses trigger a requirement to file suspicious activity reports. And FIs that serve such businesses must conduct enhanced customer due diligence. The cost of being a “marijuna bank” is high—for many, higher than the returns are worth.

Even if Congress follows through as cannabis is reclassified as a lower-risk substance, banks will likely be slow to get involved. Enhanced due diligence and reporting requirements are in force until further notice, and being in the cannabis business has a stigma among banks regardless.