Cannabis News of Note:
American Banker: Hemp ban chills prospects for progress on cannabis banking(paywalled, full text below)
Cannabis Business Times: INCBA Provides Statement on US Recriminalization of Hemp
Law 360: Loan Co. Can’t Avoid Cannabis Co.’s Contract Breach Suit (paywalled, full text below)
CRB Monitor News: Florida Bank Faces the Sting of ‘Failed’ Cannabis Compliance
Clearance Jobs News: New Hemp Restrictions Create Risks for Security Clearance Holders
Cannabis Reports of Note:
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American Banker: Hemp ban chills prospects for progress on cannabis banking
By Ebrima Santos Sanneh
December 04, 2025, 6:00 a.m. EST
Key Insight: Most hemp products — which had been legalized in the 2018 Farm Bill — will become illegal next year as part of the legislation to reopen the government last month, chilling the policy outlook for cannabis banking reform.
Supporting data: Opponents of the ban say it will wipe out a multi-billion dollar industry in legal, hemp-derived products.
Forward look: Experts say the prospects of progress in rescheduling cannabis seem remote before 2029.
A provision in the legislation that reopened the government last month will ban nearly all forms of intoxicating hemp has stamped out any lingering optimism for cannabis banking or for rescheduling the substance in the near-term.
Observers say it signals a sharp political turn away from legalization, weakens momentum for cannabis banking reform and casts further doubt on rescheduling, which has stalled despite an optimistic outlook earlier this year. Jaret Seiberg, an analyst with TD Cowen, said the overwhelmingly bipartisan vote for the amendment shows how quickly the tide has turned on the issue.
“There were 76 senators who voted to keep the ban on intoxicating hemp in the spending package,” Seiberg said in a research note. “The idea of legalizing delta-9 rather than outlawing delta-8 was never an option. It is difficult for us to find a coalition in both chambers that would favor legalization, rescheduling or even cannabis banking reform.”
The 2018 Farm Bill limited the concentration of the most common form of cannabis’ active ingredient — tetrahydrocannabinol, known as delta-9 THC — in hemp products to no more than 0.3% of the product’s dry weight. Delta-9 is only one variant of cannabis-derived intoxicant, however, and a “hemp” industry has emerged in parallel with the state-sanctioned cannabis industry. That parallel hemp industry sells products that narrowly fit within the Farm Bill exception, often containing a legally permissible level of Delta-9 THC but also intoxicating levels of other unregulated THC variants, which are typically found in trace amounts in natural cannabis.
The law expanded the ban to all forms of THC, including delta-8, delta-10, and THCA, effectively making the vast majority of modern hemp products illegal when the rule takes effect next November.
Even companies not selling intoxicants are bracing for effective collapses in their business. Many CBD products — specifically versions that include the full range of naturally occurring cannabinoids contained in the hemp plant — would be considered banned because they naturally contain small but noncompliant amounts of THC that exceed the new limit.
Jim Higdon, founder of Kentucky-based Cornbread Hemp and vice president for communications at the U.S. Hemp Roundtable, an advocacy group for legal hemp, said the move would devastate a growing and important agricultural industry. He added that the ban, sponsored by Senator Mitch McConnell, R-Ky., was driven by outside interests like the bourbon industry, which holds sway in his home state.
“The popularity of hemp derived beverages has been unacceptable to the bourbon industry that continues to lose customers, and McConnell is in a position to feather his nest for his legacy, and that includes a number of building projects that would carry his name long after he’s left,” Higdon said. “We have [less than a year] to save legal hemp THC in America and full-spectrum CBD products.”
Others in the hemp beverage sector see the ban as a direct attack on a fast-growing market. Joe Gerrity, CEO of Crescent Canna, a company that sells hemp-derived THC beverages and products, said that hemp beverages are already sold in many mainstream outlets like grocery stores, bars, restaurants and music venues and that major retailers were eyeing the sector prior to the law’s passage.
The industry is “a rapidly growing, $30 billion-a-year industry that also contributes over $1.5 billion in annual tax revenue,” Gerrity said. “Not to mention that it contributes to the employment of around 300,000 people … it stands opposed to everything Trump has espoused as a pro-business, pro-farmer and as a ‘pro-freedom President.'”
Tyler Beurlein, chair of the Banking and Financial Services Committee of the National Cannabis Industry Association, said the ban will instantly wipe out a massive revenue pool for banks that have served the industry and profited from their partnerships.
“You have a multi-billion dollar industry segment — it’s now gone,” he said. “It will also impact the banks that had taken the leap to bank those in the industry because that deposit base and growth is gone.”
The law’s impact on the official cannabis sector is more complex, and potentially positive in the short term, says Seiberg, who called it a business win — at least for banks already serving state-legal cannabis companies.
“Intoxicating hemp is largely unregulated, but competes with state-legal cannabis products,” he said. “Treating the products the same ensures a level playing field, which should benefit state-legal cannabis companies.”
Beurlein said licensed cannabis operators did not face the same restrictions on tax deductions as the regulated cannabis industry does. Section 280E of the Internal Revenue Code currently prevents cannabis companies from making tax deductions for businesses engaged in trafficking controlled substances. Section 280E applies only to Schedule I and II substances, but unless cannabis is rescheduled, the industry won’t be able to deduct expenses on federal tax filings.
“Whether or not the cannabis industry wants to admit this, it’s a big win for them.” Beurlein said. “The hemp-based side of this industry essentially didn’t have to play by the same rules as the cannabis [side] did; they weren’t subject to 280[E] … they had free reign.”
Hope for a new federal treatment of cannabis arose in May 2024, when the Biden Justice Department began the process of moving marijuana from Schedule I to Schedule III. The agency held an initial public hearing on the proposal in December 2024, but soon after the Drug Enforcement Administration stalled further consideration of rescheduling.
While Trump’s pick to lead the Drug Enforcement Administration, Terrance Cole, called considering the rescheduling proposal one of his “first priorities” during his Senate confirmation hearing in April, a July DEA release listing his top eight strategic priorities did not mention cannabis rescheduling.
Many cannabis companies already have access to banking, but often only small, state-level institutions offering limited services at higher costs are willing to work with the industry.
Larger banks, by contrast, remain cautious due to their heightened regulatory scrutiny.
Rescheduling cannabis would allow a federally legal medical market, Seiberg says, but this outcome looks increasingly unlikely.
“This would mean one would need a prescription and likely would fulfill it at a pharmacy [and] would leave illegal state-sanctioned recreational and medical markets,” Seiberg said. “The problem is that a federally legal medical market is not the most probable outcome. Our base case is that little changes at the federal level between now and the 2028 election.”
At a House Financial Services hearing with the three chief bank regulators this week, Rep. Warren Davidson, R-Ohio, highlighted the precarious state of the hemp industry and the uncertainty that banks now face when serving these companies. He submitted his questions for the record, so none of the empaneled regulators responded.
“Are banks still blocking customers who are engaged in lawful marijuana activities?” Davidson said. “Because nearly every state, whether you like it or not, has made some form of marijuana lawful in those states, and we haven’t synced up at the federal level. So [I’d] love to catch up on how we’re doing that.”
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Law 360: Loan Co. Can’t Avoid Cannabis Co.’s Contract Breach Suit
By Mike Curley
December 1, 2025, 1:09 PM EST
A New Jersey federal judge won’t let a lender escape a cannabis company’s allegations that the lender falsely held it in default so it could seize almost $2 million, saying the complaint sufficiently alleged that the lender went back on enforceable promises.
U.S. District Judge Renee Marie Bumb denied a motion to dismiss filed by Safe Harbor Financial Corp. on Wednesday in a suit brought by the cannabis company PharmaCann LLC.
PharmaCann accused Safe Harbor of breach of contract and fraud in March, claiming the lender had agreed to extend a loan and waive certain penalties but then declared the company in default anyway and seized $1.95 million from its accounts.
According to the complaint, the parties had entered into a loan agreement in 2021 under which PharmaCann borrowed $5.5 million from Safe Harbor to finance the purchase of real estate. The agreement included covenants requiring PharmaCann to maintain certain financial ratios and provide regular financial reporting.
PharmaCann alleged that by late 2023, it had fallen out of compliance with some of those covenants due to industry challenges, including regulatory hurdles and market fluctuations in the cannabis sector. The company said it approached Safe Harbor about a forbearance agreement to avoid default.
In December 2023, the parties reportedly reached an oral agreement during negotiations, under which Safe Harbor would forbear from enforcing the covenants for six months, extend the loan maturity date and waive any late fees or penalties in exchange for PharmaCann making a $500,000 principal payment and providing additional collateral.
PharmaCann claimed it fulfilled its end of the bargain, making the payment and securing the collateral, but Safe Harbor allegedly reneged just weeks later, declaring a default in January 2024 and sweeping $1.95 million from PharmaCann’s reserve accounts held at the lender.
The cannabis company further alleged that Safe Harbor’s representatives had made fraudulent misrepresentations during the negotiations, assuring PharmaCann that the forbearance was finalized while knowing it intended to call the loan.
Safe Harbor moved to dismiss in May, arguing that the alleged oral agreement was unenforceable under New York’s statute of frauds, which requires certain contracts involving loans over $250,000 to be in writing. The lender also contended that PharmaCann failed to plausibly allege fraud, as the complaint did not specify which statements were false or how they were known to be false when made.
In her ruling, Judge Bumb found that PharmaCann had adequately pled the existence of an enforceable contract. She noted that while the statute of frauds generally applies, exceptions exist for partial performance, and PharmaCann’s allegations of making the $500,000 payment and providing collateral constituted sufficient partial performance to take the agreement out of the statute.
“Plaintiff alleges that it performed its obligations under the oral forbearance agreement by making a $500,000 principal payment and providing additional collateral,” the judge wrote. “These actions, if proven, would constitute partial performance sufficient to render the oral agreement enforceable.”
On the fraud claim, Judge Bumb said the complaint met the heightened pleading standard under Federal Rule of Civil Procedure 9(b), identifying specific statements by Safe Harbor executives, such as a January 2024 email confirming the forbearance terms, and alleging that those statements were made with knowledge of their falsity to induce reliance.
The judge rejected Safe Harbor’s argument that the fraud claim was duplicative of the breach claim, noting that the allegations involved distinct misrepresentations separate from the contract itself.
Safe Harbor is represented by Michael A. Brancato and Rachel E. Yount of Archer & Greiner PC. PharmaCann is represented by Brian J. McManus and Nicholas A. Cole of McCarter & English LLP.
The case is PharmaCann LLC v. Safe Harbor Financial Corp., case number 2:24-cv-01567, in the U.S. District Court for the District of New Jersey.