The trail to federally-recognized marijuana services was unveiled last week when Attorney General Eric Holder said that the Obama administration would soon release regulations that will allow banks to do business with legal marijuana businesses. Though the proposed solution is not as game-breaking as many would have hoped, at least it’s something.
As things stand now, most marijuana businesses have resigned themselves to a cash-only economy because, as the drug is still federally illegal, banks will not offer them accounts or banking services. Currently, any bank connections with businesses in the cannabis industry can be punished by federal law for money laundering and providing assistance in drug trafficking.
In turn, this makes marijuana establishments into prime targets for crime and robbery. As the Attorney General explained during his announcement last Thursday, “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.” The businesses themselves have obviously been worried for some time now (not to mention the cash-only requirements are painfully reminiscent of dealings on the black market) so the notion of bankers taking a first step into the cannabis industry has been a long awaited dream.
Unfortunately for marijuana investors, the new recommendations will leave some wiggle room in case the feds decide to take a few swings at marijuana businesses adhering to state laws. The New York Times reports that “The rules are not expected to give banks a green light to accept deposits and provide other services, but would tell prosecutors not to prioritize cases involving legal marijuana businesses that use banks.” So, while more serious issues like drug cartels and human trafficking (to name only two) still plague the underbelly of America, banks that hold the assets of law-abiding marijuana businesses should not have to fear any legal repercussion.
In recent years, the state of Colorado has stepped forward to do what its MMJ industry has been unable to accomplish: the state deposited $9 million of medical marijuana tax money for the fiscal year 2012-13 into a JP Morgan Chase Bank account, quite the increase from its nearly $6 million the year before. According to the Denver Post, “There are no rules, no memos, no opinions, no laws or anything else that officials can point to that clearly says the state can bank pot-derived income,” yet Colorado has been doing this banking-on-the-sly since medical marijuana was legalized in 2000. Remember that the $9 million deposited into Colorado’s bank account last year was only money gained from taxing the product, and this means that direct profits in the cannabis industry were much, much greater. And that’s the money I like to imagine is holed up in some secret back-room safe where a paranoid, shotgun-toting business-owner sits alone on a mountain of cash-filled duffel bags, with only an army of trained, killer guard dogs for company (or something like that).
Clearly, there is still much work to be done before members of the cannabis industry can rest easy, but it seems likely that banks will soon begin considering banking accounts for state-law-abiding businesses. Big-name banks, such as Bank of America, might wait longer than most to ensure inaction by the federal government. However, if this slight admission by the Obama administration is what it takes to get bankers and cannabusinesses into same room together, let’s call it a step in the right direction.
Photo Credit: US Embassy New Zealand