Then (1985), The Emperor Wears No Clothes
The Federal Banking Problem: How Prohibition Persists Without Scheduling
Herer focused on the Controlled Substances Act as the primary mechanism of prohibition. He did not anticipate that even after state legalization, federal banking law would create a secondary prohibition: cannabis businesses cannot access FDIC-insured banks, cannot take card payments, cannot access SBA loans, cannot deduct business expenses (280E), cannot go public on US stock exchanges.
contested
The SAFE Banking Act (Secure and Fair Enforcement for Banking Act) passed the House seven times between 2019 and 2023 and repeatedly failed in the Senate. As of June 2026, cannabis businesses in legal states still cannot access federal banking services. This means: all-cash operations (security risk); inability to pay federal taxes by check; no credit card processing; no SBA financing; 280E federal tax (paying taxes on gross revenue, not profit, creating 70-90% effective tax rates). The federal banking exclusion is now the primary mechanism of cannabis prohibition, more practically significant than the CSA scheduling itself for legal-state businesses. Herer identified the CSA as the problem; the banking problem is the residual wall that his book did not anticipate.
Sources
- American Bankers Association cannabis banking report (2024)
- SAFE Banking Act legislative history
- 280E tax analysis, cannabis tax advisory firm (2024)