Defining how marijuana dispensaries will be allowed to work with financial institutions is quickly becoming a reality as the Department of Justice is "actively considering" how to regulate interactions between banks and marijuana shops that operate within state laws and don't violate other federal law enforcement priorities.
This week, United States Attorney General Eric Holder held a joint conference call with the governors of Washington and Colorado in which Holder laid out eight priorities that would be the aim of federal marijuana policy.
Financial institutions and other enterprises that do business with marijuana shops that are in compliance with state laws are unlikely to be prosecuted for money laundering or other federal crimes that could be brought under existing federal drug laws, as long as those cannabis businesses don't otherwise violate the priorities, according to a DOJ authority.
The eight priorities of federal prosecutors enforcing marijuana laws are, according to the DOJ, are to prosecute individuals or entities to prevent:
- The distribution of marijuana to minors.
- Revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels.
- The diversion of marijuana from states where it is legal under state law in some form to other states.
- State-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity.
- Violence and the use of firearms in the cultivation and distribution of marijuana.
- Drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use.
- The growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands.
- Preventing marijuana possession or use on federal property.
This new approach is a reversal of a DEA policy which had warned banks not to work with marijuana businesses. The DEA recognized that forcing the establishments to operate on a cash basis put them at greater risk of robbery and violence.
It is difficult to argue that any system that operates only in cash could be a "tightly regulated market in which revenues are tracked and account for.
"We need to address the public safety, crime and lost tax revenue associated when these legal and regulated businesses are operating in a cash-only system".
“We need to provide financial institutions certainty they can make their own business decisions related to legal, financial transactions without fear of regulatory penalties," he continued.
"Currently, under federal banking laws, many legal, regulated legitimate marijuana businesses operating legally according to state law are prevented from maintaining bank accounts and accessing financial products like any other business such as accepting credit cards, depositing revenues, or writing checks to meet payroll or pay taxes. They are forced to operate as cash-only enterprises, inviting crime such as robbery and tax evasion, only adding to the burden of setting up a legitimate small business".
Clearly, progress is being made in the cannabis business, and by allowing dispensaries to work closely with banks and other financial institutions, these business’ are being recognized as true business entities and will continue to grow strong.