U.S. President Donald Trump’s executive order to reclassify marijuana as a Schedule III controlled substance ushers in an important policy shift — one with significant ramifications for payments and merchant acquiring in the cannabis space. While this is progress toward modernizing federal policy, it doesn’t yet deliver full legalization, leaving key hurdles for financial services and merchant solutions providers intact.
What This Means for Payments & Merchant Services
As cannabis transitions from Schedule I to Schedule III, businesses could see reduced regulatory burdens and relief from punitive tax rules like Section 280E, potentially increasing profitability for legal operations. However, except in limited instances, major banks and payment networks remain cautious due to ongoing federal restrictions.
Big Banks Staying Conservative
Despite regulatory shifts, most large financial institutions are expected to stay on the sidelines in the near term. Cannabis proceeds are still considered illicit under federal law without full legalization, leaving banks and card networks exposed to compliance risk if they engage directly. This means mainstream card acceptance for cannabis transactions is unlikely without further law changes or legislative safe harbors.
A New Payments Ecosystem Has Emerged
In response to this gap, a specialized payments value chain has taken shape — one built around fintech innovators, niche banks, and alternative acquiring solutions able to serve cannabis merchants:
Smaller Banks & Credit Unions – A handful of state-chartered institutions now support deposits and merchant sponsorship with enhanced compliance measures.
Specialized Acquirers & Fintechs – These providers design compliant payment solutions, navigating regulatory complexity where traditional processors won’t.
ISOs & Agents – Independent Sales Organizations and agents play a critical matchmaking role, steering dispensaries toward compliant digital payment options and away from high-risk, unsustainable workarounds.
ISVs & Integrated Platforms – Cannabis-focused software providers increasingly embed digital payments directly in POS and e-commerce tools, improving experiences for merchants and customers.
Rise of ACH & Bank-to-Bank Payments
One of the most notable shifts in the cannabis payments landscape is the increased use of ACH and bank-to-bank payment methods — alternatives that bypass traditional card networks. ACH offers a regulated, cashless, traceable payment rail that is not bound by Visa/Mastercard network restrictions. This has driven innovation in digital checkout options such as “pay-by-bank” flows that link consumer bank accounts securely and rapidly.
Industry analysis indicates that cashless transactions could capture an ever-larger share of cannabis payment volume in 2026 — a meaningful evolution in a market long dominated by physical currency.
What Payments Providers Should Do Now
For stakeholders across the payments ecosystem — including banks, fintechs, ISOs, and merchant service providers — the reclassification is an indicator of transformation ahead, but not the endpoint:
Stay Compliant Today: Rigorous compliance, transparent transaction monitoring, and careful risk management remain essential to serve cannabis merchants responsibly.
Invest in Alternative Tech: ACH, integrated POS payments, and bank-centric solutions are gaining traction and present opportunities for differentiation.
Prepare for Further Reform: Continued engagement with policy initiatives like the SAFER Banking Act will help advance clarity and unlock broader financial participation down the line.
-TSG
