U.S. to adjust rules to let banks handle marijuana money
Paul Sakuma/APU.S. Attorney General Eric Holder.
By David Ingram

CHARLOTTESVILLE, Va. -- U.S. Treasury and law enforcement agencies will soon issue regulations opening banking services to state-sanctioned marijuana businesses even though cannabis remains classified an illegal narcotic under federal law, Attorney General Eric Holder said Thursday.

Holder said the new rules would address problems faced by newly licensed recreational pot retailers in Colorado, and medical marijuana dispensaries in other states, in operating on a cash-only basis, without access to banking services or credit.

Proprietors of state-licensed marijuana distributors in Colorado and elsewhere have complained of having to purchase inventory, pay employees and conduct sales entirely in cash, requiring elaborate and expensive security measures and putting them at a high risk of robbery.

It also makes accounting for state sales tax-collection purposes difficult.

"You don't want just huge amounts of cash in these places," Holder told the audience at the University of Virginia. "They want to be able to use the banking system. And so we will be issuing some regulations I think very soon to deal with that issue."

Holder's comments echoed remarks by his deputy, James Cole,
in September during a Senate Judiciary Committee hearing on Capitol Hill.

Colorado this month became the first state to open retail outlets legally permitted to sell marijuana to adults for recreational purposes, in a system similar to what many states have long had in place for alcohol sales.

Washington state is slated to begin its own marijuana retail network later this year, and several other states, including California, Oregon and Alaska, are expected to consider legalizing recreational weed in 2014.

The number of states approving marijuana for medical purposes has also been growing. California was the first in 1996, and has since been followed by about 20 other states and the District of Columbia.

But the fledgling recreational pot markets in Colorado and Washington state have sent a new wave of cannabis proprietors clamoring to obtain loans and make deposits in banks and credit unions.

The Justice Department announced in August that the administration would give new latitude to states experimenting with taxation and regulation of marijuana.

But with the drug still outlawed at the federal level, banks are barred under money-laundering rules from handling proceeds from marijuana sales even in states where pot sales have been made legal.

The lack of credit for marijuana businesses, however, poses its own criminal justice concerns, Holder said.

"There's a public safety component to this," he said. "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."

Holder did not offer any specifics on a timeline for action on banking services for marijuana. Cole in September said the Justice Department was working on the issue with the Treasury Department's financial crimes enforcement network.

Critics of liberalized marijuana laws have said the lack of credit faced by pot retailers was beside the point.

"We are in the midst of creating a corporate, for-profit marijuana industry that has to rely on addiction for profit, and that's a much bigger issue than whether these stores take American Express," said Kevin Sabet, co-founder of the anti-legalization group Smart Approaches to Marijuana.


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jdykbpl45

Obama is a druggie, Holder is a gun ruinner. Take your pick!

January 24 2014 at 5:23 PM Report abuse +2 rate up rate down Reply
RockNHula

Marijuana was legal until 1937, when the tycoon Henry Anslinger feared that it would compete with lumber, paper, and cotton. Good fear because it's a better product. It wasn't called Marijuana until the late 1800s, when the former Mexican general, and bandit, Pancho Villa could not pronounce the word "Mariguanco" (intoxicating plant) because he had no teeth. It was always formally called Cannabis. History might portray the worst thing we did was the creation of the DEA in 1971. Their original mission was to fight the cocaine epidemic, but after that simmered down, they didn't want to be disbanded and needed a new boogeyman so they turned to organizing the anti-pot Campaign Againt Marijuana Propogation, causing four government agencies, and local police to seek out those awful hippie type--stereotyped pot users and growers. This blight resulted in almost one million American men and women losing their livlihoods and many went to prison, their families were broken, and hard drug dealers and illegal aliens replaced them selling meth, crack, heroin, and pills. The drug war has been a dismal failure for one reason only, government and law enforcment lost the support of our countrymen when they lumped Marijuana in with tissue dependant narcotics. As a private detective for 31 years, I have seen some very good and honest people go away. They are not paying taxes anymore, and not contributing to society but are costing us a fortune. I say set them free and legalize it in all 50 states. For those who don't agree, there is no alternative. It can't be stopped. Continuing to resist legalization will only cause good hard working Americans to throw handfuls of seeds into the great outdoors. The voices of the Reefer Madness crowd were defeated by science. Tell you something else--Anheiser Bush is going to experience a copyright infringement problem when people in the Marijuana industry adopt the slogan "This bud's for you." Everyone have a good day! From Ben, in Hawaii.

January 24 2014 at 1:14 PM Report abuse +1 rate up rate down Reply
Travis John

Every state needs to completely legalize, tax, and regulate the weed but without being ridiculous about it. As long as folks are responsible with the stuff and don't over-indulge in it everything will be fine.

January 24 2014 at 11:59 AM Report abuse rate up rate down Reply
rbet19

Wait!!! A state-licensed business, after going through obstacles and due diligence, cannot formally open a bank account? How can it be accountable for any financial reporting? How does an owner deal with SEC and IRS? Without a bank account, the owner is nothing but an "in-house" drug dealer.

January 24 2014 at 11:27 AM Report abuse +1 rate up rate down Reply
1 reply to rbet19's comment
Detter Dang

Cash, they keep records and take cash to the bank. Some take small truck loads to the bank and the bank spends hours counting the money. They (state) tracks the money...they will be visiting to determine compliance. CO has already brought in big tax bucks.

January 27 2014 at 8:01 AM Report abuse rate up rate down Reply
bdgrizcp

The law of unintended consequences rears it ugly head yet again. While the legalization of pot will remain a Balkanized issue for some time, and even if the feds overturn all our federal pot laws, it will still be illegal in many states and many people will not be able to enjoy it due to work rules. You want your co-pilot to have a little purple kush? Didn't think so. As for the feds, overturning pot laws would have a dramatic effect on drug interdiction, though probably not the way we'd like it to. Just for the record: legal booze never killed off the shine market. Legal pot will not kill the pot market--not anytime soon.

January 24 2014 at 11:24 AM Report abuse rate up rate down Reply
worried man

It is hard enough to navigate this life being straight let alone being stoned. Last days of Rome are coming soon to a neighborhood near you soon

January 24 2014 at 10:20 AM Report abuse rate up rate down Reply
1 reply to worried man's comment
Larry Lang

Voice of experience or just making stuff up?

January 24 2014 at 10:49 AM Report abuse rate up rate down Reply
worried man

The government needs this money to push world domination forward. We want to make sure that Coca Cola is in every cave and tent on this planet. It is known that McDonals is funding space exploration with the hope of finding another inhabited planet and expand their business as soon as possible.

January 24 2014 at 10:18 AM Report abuse rate up rate down Reply
rbrtkyte

This is just a band aid to the REAL solution ,Legalise it ,Then maybe we can better deal with the Mexcian drug cartels and police can go after the more serious drugs problems we have in this country. I think the ca tis out of the bag here really,the people have spoken time and time again in majority of this solution ,its time the Government actually paid attention to that .

January 24 2014 at 9:34 AM Report abuse +2 rate up rate down Reply
richie

can you break a law thats not a law

January 24 2014 at 7:30 AM Report abuse +4 rate up rate down Reply