U.S. Clears Banks to Serve Marijuana Businesses without Punishment
Banks have received guidance from the Barack Obama administration on how they may serve marijuana-related businesses without being prosecuted. But bankers are still wary they’ll be burned by federal authorities for catering to businesses legal in their states.
The guidance was provided separately by the Justice and Treasury departments. It still requires financial institutions to file “suspicious activity” reports on the businesses, but they’ll be shorter than previous versions.
Without access to the banking system, legal marijuana businesses are still forced to complete all their transactions in cash and have nowhere to deposit their receipts, creating a security issue.
“You don’t want just huge amounts of cash in these places,” Attorney General Eric Holder said recently. “They want to be able to use the banking system. And so we will be issuing some regulations…” The new guidance includes not placing priority on prosecuting banks that have customers in marijuana-related businesses if they are operating according to their state laws. It does not rule out the possibility of prosecution for the banks, however.
“While we appreciate the efforts by the Department of Justice and FinCEN, guidance or regulation doesn’t alter the underlying challenge for banks,” Frank Keating, president of the American Bankers Association, said in a statement. “As it stands, possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution and assorted sanctions.” FinCEN is the Financial Crimes Enforcement Network, which issued the Treasury guidelines.
Marijuana industry advocates weren’t completely satisfied either. “It’s a great step in the right direction, but ultimately it would not solve all the problems here,” said Michael Elliott, executive director of the Medical Marijuana Industry Group in Colorado, told The New York Times. “We need to go beyond saying that this is a low law enforcement priority. There are still violations of federal law going on here. So, federal laws need to be changed to ensure that what is legal in states like Colorado is legal at the federal level, as well.”
Twenty states and the District of Columbia now allow the use of marijuana for medical purposes. Colorado and Washington recently legalized the recreational use of pot as well.
To Learn More:
U.S. Issues Marijuana Guidelines for Banks (by Serge F. Kovaleski, New York Times)
Banks Still Won't Touch Medical Marijuana Dispensaries (by Ken Broder, AllGov)
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