Paving the way for banks to process legal marijuana-related businesses, Atty. Gen. Eric Holder ordered the Justice Department to exempt banks from money laundering and racketeering charges. Putting his toe into the water, Holder took the first, but most timid, step to allow marijuana business to open up legitimate bank accounts. Holder’s move falls short of ordering the Drug Enforcement Agency to re-classify marijuana from its current status as a Schedule 1 narcotic, together with heroin and cocaine, to a controlled substance, eliminating legal penalties for cultivation, distribution and sales. Ordering the Treasury Department to exempt banks from criminal prosecution for processing transactions with legal marijuana businesses helps open the door for Colorado and Washington State, where voter approved legalization for recreational purposes in 2012.
Holder’s first step doesn’t remove the federal stigma to marijuana where it’s still classified as an illegal narcotic. Responding with skepticism to Holder’s announcement, the American Bankers Assn. said, “guidance or regulation doesn’t alter the underlying challenge for banks. As it stands, possession or distribution of marijuana violates federal laws, and banks that provide support for those activities face the risk of prosecution and assorted sanctions,” urging Holder to do more to re-classify marijuana. Law enforcement officials oppose attempts to re-classify marijuana because they stand to lose a substantial number of prosecutable cases. Most banks want the Justice Department to go all the way and change, once-and-for-all, marijuana’s status as a Schedule 1 narcotic. Without re-classifying pot, banks continue to operate in the murky zone of supporting drug trafficking and money laundering.
Treasury Department’s Financial Crimes Enforcement Network [FinCEN] signaled to the banking industry that they won’t prosecute institutions processing legal marijuana-related businesses. “This is a decision that each financial institution needs to make on its own,” said an unnamed FinCEN official. “We feel quite comfortable that we have acted within the scope of our authority,” not expecting challenges from the Justice Department. Local, state and federal law enforcement agencies need the Justice Department to step up and re-classify marijuana. As long as it’s on the dangerous drug list, the banking industry will have misgivings about transactions without fearing prosecution. FinCEN routinely investigates money laundering and terrorist-related transactions. Legal marijuana businesses have too much cash outside the banking system to process local, state and federal tax payments.
Weighing in on the thorny marijuana issue, President Barack Obama said he discouraged his own daughters from using pot. “As has been well-documented, I smoked pot as a kid, and I view it as a bad habit and a vice, no very different from the cigarettes that I smoked as a young person up through a big chunk of my adult life,” Obama told the New York Times Jan. 20, 2014. “I don’t think it is more dangerous than alcohol,” attesting to the need to re-classify the same as alcohol. While there’s plenty of controversial research on marijuana, especially related to the gateway theory of drug abuse, no one really knows the long-term adverse effects. Whatever the negative side effects, Obama points out that, in his experience, it didn’t lead to productive behavior, more-or-less the same as alcohol. To the extent that some types of pot are more stimulating, it might prove more habit forming.
Advocates of legal marijuana go overboard minimizing any adverse side effects of short and long-term marijuana use. “Every objective study on marijuana has concluded that it is far less harmful than alcohol to the consumer and to society. Marijuana is less toxic and less addictive than alcohol, and it does not contribute to violent and aggressive behavior like alcohol does,” said Mason Tvert, Communication Director for Denver-based Marijuana Policy Project. Tvert’s comments mirror the same hyperbole as other pro-marijuana lobbies. Whether admitted to or not, most mind- altering substances, including alcohol, have adverse effects on performance in a variety of areas. It’s reasonable to argue that marijuana may have less effect on “reaction time” and other standardized performance tests related to operating machinery or operating automobiles and other transportation vehicles.
Taking a step in the right direction the Justice Department needs to go further and re-classify marijuana comparable to alcohol. No one can win the argument of what’s better-or-worse for the individual or society—alcohol or marijuana. What’s abundantly clear and long overdue is that marijuana should be taken off the dangerous narcotic’s list. “Our laws should be based on the facts, and it’s a fact that marijuana is much safer than alcohol,” said Tvert, again overstating the argument. With a fifteen-year track record of legal medical marijuana in California, there’s been no reported incidence of increased crime or medical problems associated with marijuana use. Legalizing pot for recreational use takes the fig leaf off in states with “compassionate use” laws, where the lion’s share of prescriptions is written for recreational users. Obama and Holder need to do more than legalizing bank transactions.
About the Author
John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He’s editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.