In a move described as “a major shift on U.S. marijuana policy,” U.S. Attorney General Eric Holder said on Thursday that the Obama administration “will be issuing some regulations” to outline rules for providing banking services to marijuana businesses.
“You don’t want just huge amounts of cash in these places. They want to be able to use the banking system,” Holder said yesterday. “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.”
According to the New York Times, “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.”
With Colorado having begun recreational sales of marijuana to adults over the age of 21, access to banks has become a major issue for burgeoning pot businesses. Because marijuana is still illegal under federal law, banks have been unwilling to provide services for businesses dealing with pot, out of fear they could be charged with money laundering, aiding and abetting drug trafficking, or other crimes. As a result, most marijuana businesses are performing all transactions in cash, an obstacle that provides challenges from payroll to bill-paying. It also engenders security concerns, as cash-only businesses are a tantalizing target for would-be robbers.
Although Holder did not issue a specific date for the rules, he said in August 2013 that the Department of Justice was already “actively considering” their implementation. In a memo accompanying that announcement, Deputy Attorney General James Cole noted the criminal justice benefits of “replacing an illicit marijuana trade that funds criminal enterprises with a tightly regulated market in which revenues are tracked and accounted for."
Operating as cash-only businesses makes financial transparency a challenge for regulators creates a host of logistical issues for marijuana business owners. Speaking with the New York Times, Andy Williams, one of the owners of the Denver dispensary Medicine Man, said that he’s had to hire an armored car service to move his money and has been forced to bounce from bank to bank due to their perceived risk.
“We go to great lengths to lower our profile,” he said, even spraying Febreeze on his cash to cover the stench of pot.
On Friday, Colorado Gov. John Hickenlooper, who has previously called for “inter-agency guidance” regarding banking rules for marijuana business, issued a statement welcoming Holder’s comments, according to the Associated Press.