Your Bank Can Now Breathe Easy as it Takes Your (Legal) Pot Money

A caregiver picks out a marijuana bud for a patient at a marijuana dispensary in Denver. (AP Photo/Ed Andrieski)
National Journal
Catherine Hollander
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Catherine Hollander
Feb. 14, 2014, 9:21 a.m.

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.

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