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A bipartisan bill recently reintroduced in Congress could mark a turning point for the cannabis industry’s long-standing challenges with federal tax policy and access to banking. The Strengthening the Tenth Amendment Through Entrusting States 2.0 Act — commonly referred to as the STATES 2.0 Act — seeks to reconcile federal law with the growing number of states that have legalized marijuana in some form.

Backed by Reps. Dave Joyce, R-Ohio, Max Miller, R-Ohio, and Dina Titus, D-NV, the bill proposes a federal framework that respects state and tribal authority to regulate cannabis, while establishing clear boundaries between legal and illicit activity. With 38 states and Washington, D.C., already embracing some form of legalization, the STATES 2.0 Act could help bring policy into alignment with economic reality.

At the heart of the legislation is the de-scheduling of marijuana under federal law — but only for cannabis activity that complies with state or tribal regulations. Businesses operating legally under these frameworks would no longer be subject to the Controlled Substances Act, while unlicensed operations would remain prohibited and subject to federal enforcement. This approach preserves state sovereignty while offering federal clarity for enforcement and regulation.

The bill also allows for regulated interstate commerce between consenting states — an important step for operators in states with supply gluts or constrained retail access. With cannabis increasingly treated as an interstate business — both in terms of supply chains and consumer behavior — this provision acknowledges the evolution of the market.

Perhaps most notably for financial services, the STATES 2.0 Act addresses the ongoing dilemma banks and credit unions face when considering whether to serve cannabis-related businesses, or CRBs. Currently, marijuana’s federal Schedule I status exposes institutions to potential violations of anti-money-laundering statutes and the Bank Secrecy Act, or BSA, even when servicing businesses fully compliant under state law.

The legislation does not overhaul banking statutes, but it does offer much-needed clarity. By exempting compliant cannabis activity from federal prohibition, the bill establishes that proceeds from such operations are not subject to federal forfeiture and do not constitute criminal activity under federal law. This distinction, while subtle, would significantly reduce legal uncertainty for financial institutions — potentially encouraging broader participation in the cannabis sector and reducing the industry’s reliance on cash transactions.

Financial institutions would still need to maintain robust compliance systems to ensure clients remain in good standing under local laws. The responsibility to report suspicious or illicit activity under BSA obligations would remain in place. But with the STATES 2.0 Act, banks and credit unions would gain a more defined framework within which to operate — a development many in the financial community have been calling for.

The bill also proposes a long-awaited fix to another major financial obstacle: IRS Section 280E. Currently, this section prevents cannabis businesses from deducting ordinary business expenses, such as wages, rent, insurance and loan interest, because the federal government still classifies marijuana as an illegal substance. The result has been outsized tax burdens for state-compliant businesses, with effective rates sometimes exceeding 60%.

Repealing the application of 280E to legal cannabis operators would align the industry with standard tax treatment applied across other sectors. The ability to deduct routine expenses would lower the cost of doing business, improve access to capital, and free up funds for expansion, hiring and innovation.

Importantly, such reform could also reduce the need for the complex legal and tax structures cannabis companies have developed to manage 280E exposure. Simplifying these corporate structures could help operators — especially smaller and minority-owned businesses — reclaim both time and capital.

Beyond banking and taxation, the STATES 2.0 Act includes measures aimed at creating national standards for consumer safety. It establishes a regulatory role for the Food and Drug Administration, requiring labeling, testing and manufacturing oversight for cannabis products — though it stops short of mandating premarket approval. This approach aims to balance public health concerns with business continuity.

The bill also creates a federal excise tax framework to fund youth prevention, public safety initiatives and substance abuse education, while avoiding heavy-handed duplication of state-level taxes. In acknowledgment of ongoing concerns around impaired driving, it directs the Government Accountability Office to conduct traffic safety studies related to cannabis legalization.

The STATES 2.0 Act does not eliminate the need for diligence. Cannabis operators would still need to maintain full compliance with state and tribal regulations, and financial institutions would continue to bear responsibility for detecting and reporting illegal activity. But what the bill does do is remove two of the most prohibitive barriers to a fully functioning cannabis economy.

The industry’s next chapter — if shaped by legislation like the STATES 2.0 Act — could be one marked by transparency, responsible growth and increased access to financial tools that every other legal industry takes for granted. The STATES 2.0 Act meets Congress, states, and the public where it is right now — allowing states to make their own choices on legalization and allowing for a national framework and federal support for those that have legalized. Whether it’s a small cultivator seeking a loan or a regional bank seeking federal regulatory support, the STATES 2.0 Act signals that Congress is proposing a commonsense solution for a national market that will aid businesses and grow an industry.