For more than 80 years, marijuana has been illegal due to its classification as a Schedule I drug under the Controlled Substances Act. In 2016, during President Barack Obama’s administration, the Drug Enforcement Administration refused a petition to reclassify it as a Schedule II drug, which includes opioids. The reason: the U.S. Department of Health and Human Services concluded marijuana’s risks outweigh its potential benefits.

The Cole Memorandum in 2013 relaxed criminal enforcement in states that legalized marijuana possession and established regulation governing its production, processing and sale, which encouraged more states to allow its use. Although former U.S. attorney general Jeff Sessions rescinded the memo in 2017, most states are continuing to expand legalization. State legalization is not welcome by everyone. The New Jersey legislature is considering a bill to legalize recreational marijuana—in March the state’s lawmakers postponed a vote on the issue when it became clear that it lacked enough support in the Senate—but 60 towns in the Garden State plan to ban sales within their borders.

Meanwhile, other federal laws and policies discourage banks and insurers from serving cannabis businesses. Financial institutions could find themselves held liable for aiding and abetting an unlawful marijuana business or be subject to civil asset forfeiture laws. And businesses also have the Bank Secrecy Act/Anti-Money Laundering Law and the Racketeer Influenced and Corrupt Organizations Act to worry about.

The U.S. Treasury Department’s Financial Crimes Enforcement Network’s guidance is another concern. Scott Sinder, The Council’s chief legal officer and Steptoe & Johnson partner, says although the network intended to give financial institutions a path forward to service marijuana-related businesses, the suspicious activity reports and broader federal prohibitions are enough to discourage banks and insurers from entering the market.

The Internal Revenue Code Section 280E is also a problem because it prohibits businesses “involved with illegal activities from taking tax deductions,” says Ian Stewart, chair of Wilson Elser’s cannabis law practice team.

Congress has been considering ways to reduce or eliminate federal barriers. Several bills, which are either pending or awaiting reintroduction from previous sessions, fall into three general categories, Sinder says. The first, he says, would “legalize banking and offer broader financial services access for the cannabis industry.” The second would protect states that have enacted laws legalizing marijuana from federal prosecution by exempting them from the Controlled Substances Act. The idea, he says, is not to disrupt the overall federal framework but to “find room for states to do what they want.”

The third approach, which Sinder favors, would remove marijuana from the purview of the Controlled Substances Act completely and regulate marijuana in a manner similar to alcohol. The Food and Drug Administration, Sinder says, “would have little regulatory authority, and it would create an excise tax regime,” similar to what it created for cigarettes.