If you're in the marijuana business in one of the 20 states and District of Columbia where you can legally operate, it might soon become easier for you to take that business to the bank — literally.
The Departments of Treasury and Justice on Friday issued guidance intended to "move from the shadows the historically covert financial operations of marijuana businesses," Jennifer Shasky Calvery, director of Treasury's Financial Crimes Enforcement Network (FinCEN), said in a statement.
Banks found themselves in a pickle as legal marijuana use spread throughout the United States. A 1970 law, the Bank Secrecy Act, requires them to report any transactions associated with illegal activity. And even with the wave of state legalizations for medical and, in Colorado and Washington State, recreational uses, pot remains illegal at the federal level. As a result, banks have been hesitant to get involved with the growing crop of marijuana-related businesses.
FinCEN's guidance makes clear to banks that dealing with legal marijuana businesses is okay, so long as they continue to report suspicious activity. For example: If you're a banker and a customer with a boring-sounding, non-pot related business — such as a "consulting," "holding" or "management" company — deposits "cash that smells like marijuana," you should flag it, FinCEN said.
While the new guidelines clarify how banks should proceed, they don't overturn the Bank Secrecy Act, nor do they change how marijuana is treated as a drug at the federal level.
"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."
The Justice Department hopes that by making it easier for banks to engage with marijuana businesses, they'll cut back on businesses' reliance on cash in places where pot is legal.
"There's a public safety component to this. Huge amounts of cash, substantial amounts of cash, just kind of lying around with no place for it to be appropriately deposited, is something that would worry me just from a law-enforcement perspective," Attorney General Eric Holder told an audience at the University of Virginia's Miller Center last month.
The guidelines are an attempt to remedy that. If they're successful, they'd be a dope Valentine's Day present for pot businesses across the country.
This article was updated on Friday at 4:50 p.m.