Heading for a showdown on cannabis and banking?

Leland Rucker | Boulder Weekly

Almost within minutes of the official announcement, headlines last Friday proclaimed that the Department of Justice and the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury, in separate issuances, had finally given banks a green light to work with businesses involved in cannabis.

The guidelines issued were along the lines of past memos from the Obama Justice Department since 2009. The cannabis industry immediately praised the new guidance.

National Cannabis Industry Association Executive Director Aaron Smith called it a huge victory. “The legal, regulated cannabis industry is legitimate, professional and prospering, and our businesses deserve to be treated like those in any other American industry.’’

The Drug Policy Alliance praised Obama. “It appears that the administration is trying to provide as much protection as possible for the marijuana industry, given the constraints of federal law,” said Executive Director Ethan Nadelmann. “The assurances the administration has provided appear fairly substantial and will hopefully prove sufficient so that banks will feel safe doing business with the marijuana industry.”

Mike Elliott, executive director of the Marijuana Industry Group, was somewhat more cautious in his appraisal. “While we believe today’s guidance should provide banks some of the assurances they need to begin doing business with the marijuana industry, it doesn’t solve all the problems.”

The public safety issue is serious: Cannabis businesses have to deal mostly in cash. They can’t borrow money from financial institutions. They don’t get tax breaks every other business is allowed. And with millions of dollars in cash floating around, people and businesses face serious risks.

Congress hasn’t been completely idle. HR 499, the Ending Federal Marijuana Prohibition Act sponsored by Rep. Jared Polis (D-Boulder) would remove marijuana from its dangerous-drug classification, languishes, as does HR 2652, the Marijuana Business Access to Banking Act, introduced by Congressmen Ed Perlmutter (D-Arvada) and Denny Heck (D-Wash.) and supported by Polis, Mike Coffman (R-Aurora), Diana DeGette (D-Denver) and some others. It would allow banks, credit unions and other depository institutions the legal clearance to provide banking services to a marijuana-related legitimate business.

Friday’s guidance is the fourth to be issued by the Obama Administration on the subject since 2009. Last August Justice issued “the Cole memo,” which advised federal prosecutors not to bother cannabusinesses unless they were suspected of violating a set of eight rather obvious enforcement priorities, among them selling to minors, moving marijuana outside the state or diverting money to organized crime.

The Friday memo says that banks can allow marijuana businesses to open savings accounts, make payroll and pay taxes. It clarifies how financial institutions can provide services to cannabusinesses and still remain consistent with their obligations to the Bank Secrecy Act of 1970, which requires financial institutions to help detect and prevent money laundering by keeping records of cash purchases and reporting suspicious activity that might indicate money laundering, tax evasion or other criminal activities.

“This guidance should enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses,” the memo states.

The Colorado Bankers Association responded with something less than enthusiasm. “The guidance issued today by the Department of Justice and the U.S. Treasury only reinforces and reiterates that banks can be prosecuted for providing accounts to marijuana-related businesses,” wrote President and CEO Don Childears, in a press release minutes after the official announcement.

“The Justice Department piece doesn’t really do anything for the banking industry,” says Barbara Walker, executive director of the Independent Bankers Association of Colorado, which represents community banks around the state. “Until we hear from our direct federal banking regulators, that it’s OK with them, we’re still hanging out with federal issues, especially for banks in multi-state areas.”

So which is it? The executive branch says it has done all it can. It has issued guidance that, at least so far, hasn’t convinced commercial bankers that they won’t, someday, be prosecuted for working with cannabis businesses. So everybody says it’s up to Congress now. Public safety, as well as allowing cannabis businesses the chance to succeed, is bipartisan, something everyone can support. Perlmutter’s Marijuana Business Access to Banking Act is ready and waiting for its chance on the House floor.

Now, for whatever reasons, one of the largest lobbying organizations in the country is supporting legislative change. Is there any reason why any smart congressperson would pass up a chance to develop some goodwill around an issue of obvious public interest and safety?

Not convinced that’s gonna happen?

Though Obama has kept the pressure on Congress to act, the executive department has one final trick up its sleeve. Let’s say that Congress fails to seize the day and create an appropriate law that would let cannabusinesses and financial institutions off the hook.

The Justice Department could reschedule cannabis. Even more interestingly, it could de-schedule it, taking it off the schedule of illegal drugs entirely, which would leave it in the same category and subject to regulation as legal products like tobacco or alcohol.

I’m probably dreaming. But I’m not the only one. The momentum is really building on this one, and who would have guessed we’d already come this far?

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