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Feds ease banking restrictions for marijuana biz

By Josh Richman
Friday, February 14th, 2014 at 1:04 pm in marijuana, Obama presidency.

The Obama administration issued new guidelines Friday that’ll make it easier for banks to work with marijuana-related businesses.

This had been a big problem for businesses in the 20 states – including California – plus the District of Columbia where medical use of marijuana is legal under state law, and particularly in Washington and Colorado, which have legalized marijuana for recreational use.

Marijuana is generating millions of dollars in those states, but because it’s still banned by federal law, many banks and credit card issuers were loath to let such businesses open accounts. That left many marijuana businesses to do all their transactions in cash, and having so much cash around increases the risk of robbery and other violent crimes.

But on Friday, the Treasury Department’s Financial Crimes Enforcement Network in coordination with the Justice Department issued guidelines to clarify “how financial institutions can provide services to marijuana-related businesses” consistent with their Bank Secrecy Act obligations.

“Now that some states have elected to legalize and regulate the marijuana trade, FinCEN seeks to move from the shadows the historically covert financial operations of marijuana businesses,” Jennifer Shasky Calvery, the Financial Crimes Enforcement Network’s director, said in a news release. “Our guidance provides financial institutions with clarity on what they must do if they are going to provide financial services to marijuana businesses and what reporting will assist law enforcement.”

Banks should check with state authorities whether the business is duly licensed and registered and review the information it provided to get that license; learn as much as possible about the business’ owners, products and customers; and monitor the business for any suspicious activity or news reports of legal problems, the memo advised.

Even so, banks must file “suspicious activity reports” on any funds derived from marijuana, the memo says – but they can file special “limited” reports for businesses that are believed to be complying with state law.

Drug reform and marijuana legalization advocates are pleased.

“It appears that the Obama administration is trying to provide as much protection as possible for the marijuana industry, given the constraints of federal law,” Ethan Nadelmann, the Drug Policy Alliance’s executive director, said in a news release. “The assurances the administration have provided appear fairly substantial and will hopefully prove sufficient so that banks will feel safe doing business with the marijuana industry. I have to say I’m impressed by how the White House is trying to make this work, especially given the inability of Congress to do anything constructive in this area.”

Steph Sherer, executive director of Americans for Safe Access, said advocates have been pushing for such concessions for years, but it’s still a piecemeal approach.

“We will certainly be working with banks, credit unions, and credit card companies to ensure proper implementation of this federal guidance,” she said. “Removing the risks of operating as an ‘all-cash’ business cannot be overstated, but we will also continue to put pressure on the Obama Administration to wrap these types of discrete practices into a more comprehensive medical marijuana policy.”

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