It would be decriminalization. My bad.I don't think that legalized is the right word, as that implies that it is not a criminal code offence and IIRC the criminal code is federal. Instruction to law enforcement to not arrest & charge and unwillingness from the DA to prosecute - what would that be? Tolerance or decriminalization?
The criminal code part is a big deal as none of the federally chartered banks can have any relationship (banking, payment processing etc.) as doing any of those things would constitute money laundering.