Feds clear path so pot businesses can do their banking
Feb 14, 2014, 12:14 PM | Updated: 2:14 pm
The federal government is offering new guidance on how legal marijuana businesses can do their banking, clearing another obstacle for marijuana growers and sellers in Washington state and Colorado.
The guidance issued by the Justice Department and Treasury Department is intended to increase the availability of financial services for legal marijuana businesses that are licensed and regulated, while preserving the government’s enforcement power.
“It is in conformance with Justice’s memorandum of last August in which they clartified the eight major conditions of standing down on prosecution in states that legalized marijuana use,” said Cong. Denny Heck, D-Wash.
Washington and Colorado in 2012 became the first states in the nation to approve recreational use of marijuana. A citizens’ group is hoping to make Alaska the third state in the nation to do so.
Currently, processing money from marijuana sales puts federally insured banks at risk of drug racketeering charges, and they therefore refuse to open accounts for marijuana-related businesses.
The American Banking Association remains cautious.
“While we appreciate the efforts by the Department of Justice and FinCEN (Financial Crimes Enforcement Network), guidance or regulation doesn’t alter the underlying challenge for banks,” wrote Frank Keating, ABA President and CEO on the organization websie. “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.”
Friday’s move will allow banks and other financial institutions to serve marijuana-related businesses while ensuring that they know their customers’ legitimacy and remain obligated to report possible criminal activity, the Treasury Department said.
“They have to submit reports if there’s something funny going on is the bottom line,” said Heck. “They’re called Suspicious Activity Reports.”
The guidance makes it clear that financial institutions should individually assess the risk of providing services to marijuana-related business and are obligated to file reports about suspected illegal activity.
The 7-page document from FinCEN re-states that the manufacture and distribution of marijuana remains illegal under federal law. The guidance still preserves the government’s power to enforce criminal laws.
Washington Congressman Denny Heck said the guidance gives businesses access to a full range of banking services, including credit cards, payroll and direct deposit. He called on regulators to “implement this guidance in a timely manner.”
The U.S. Attorney in Seattle issued a statement making it clear that states must still have “strong and effective regulatory and enforcement systems.”
The Associated Press contributed to this report
