The issue is that the port channel between the switches is not functioning correctly because both interfaces are set to passive mode, which means they are not actively negotiating to form the port channel. For a successful port channel, at least one end of the interfaces should be active to initiate the PAgP or LACP negotiation. Therefore, configuring interface Gi0/1 on Switch2 as active will initiate the negotiation process and form the port channel successfully. References: Implementing and Operating Cisco Service Provider Network Core Technologies (SPCOR) - Configuring Port Channels