Banks Wary of Marijuana Money Say a New DOJ Memo Won't Be Enough to Make Them Comfortable

A couple of weeks ago, when Attorney General Eric
Holder said the Justice Department and the Treasury Department will
be issuing guidance “very soon” to banks wary of dealing with
state-licensed marijuana producers and distributors, I
wondered whether it would be enough to make cautious financial
institutions comfortable with taking deposits from businesses that
federal law still treats as criminal enterprises. A recent
Politico article suggests not:

Financial firms must comply with a slew of anti-money-laundering
rules enforced by bank regulators, and the risk of violations could
be big for banks that choose to do business with companies that are
breaking federal laws.

Also, the DOJ directive wouldn’t be binding, and there have been
past examples of prosecutors who disagree with similar guidance
ignoring the directive. The next administration could also wipe it
off the books. All it takes is one U.S. attorney to file criminal
charges, and a bank could lose its charter and be forced to shut
down.

With this in mind, for many banks—even with assurances from
Justice as well as Treasury’s anti-money-laundering division—the
risks still outweigh the rewards.

“From my conversations with bankers, I don’t see that there’s
anything they can do that’s going to give a bank the comfort they
need until Congress changes the law,” said Rob Rowe, senior counsel
at the American Bankers Association….

Don Childears, the president of the Colorado Bankers
Association, which has pushed hard for changes to the rules, said
he is not convinced that an opinion from the executive branch is
enough.

“It’s a murky area,” Childears said. “It literally will take an
act of Congress.”

One Colorado bank, Pueblo Bank & Trust, does not even allow
its ATMs to be placed in or near marijuana businesses, presumably
because it does not want customers to use cash from the machines to
buy cannabis. “Marijuana remains an illegal drug under federal
law,” PB&T President Mike Seppala told
The Pueblo Chieftain last week, “and that’s the bank’s
policy.”

Because growing and selling marijuana remain federal felonies,
providing financial services to businesses engaged in those
activities can be viewed as money laundering or aiding and abetting
drug trafficking. Holder can announce that such prosecutions should
not be a high priority for U.S. attorneys, but they won’t
necessarily listen, and the policy can be changed at any moment, by
this administration or the next. Without new federal legislation,
banks accepting marijuana money will always be taking a legal
risk.

The Respect State
Marijuana Laws Act, introduced last spring by Rep. Dana
Rohrabacher (R-Calif.), would address the problem by declaring that
the provisions of the Controlled Substances Act dealing with
cannabis “shall not apply to any person acting in compliance
with state laws.”  The Marijuana
Businesses Access to Banking Act, introduced last summer by
Reps. Ed Perlmutter (D-Colo.) and Denny Heck (D-Wash.), takes a
narrower approach, protecting banks that deal with state-legal
marijuana businesses from criminal investigation or prosecution and
from regulatory repercussions, including loss of federal deposit
insurance.