“Without access to basic banking services, many legitimate cannabis businesses are forced to manage sales, payroll, and even tax bills entirely in cash.”
Drug dealers may only accept cash, but those in the legal marijuana industry throughout the U.S. say they want access to and the chance to be regulated by the banking industry so that like other legitimate businesses, business owners and their customers can use credit card services, deposit money in a bank, and more.
The trouble right now is that because marijuana is viewed as an illegal substance on a federal level, federally insured banks are prohibited from knowingly handling any marijuana-related money. But that all may be changing soon.
On Tuesday U.S. Rep. Denny Heck, D-Olympia, Wash., said the federal government’s new guidance for banks and bank regulators will be released “imminently.”
What Heck is referring to is Attorney General Eric Holder’s pledge that the Justice Department and the Treasury Department would issue guidance “very soon” to banks on how they can work with marijuana businesses.
Though the guidance had not been issued by the time of this article’s publication, Heck, a member of House Committee on Financial Services, who along with Congressman Ed Perlmutter of Colorado has pressed for marijuana banking reform, said legal marijuana businesses will be provided with a “full range of banking service, including accepting credit cards, direct depositing payroll checks and more,” under the guidance.
In other words, marijuana-related businesses will no longer be forced to operate on a cash-only basis.
According to the Seattle Times, Heck did not specify when the banking guidance was going to be announced or how he knew it was imminent. The congressman was not available for further comment, and a spokesman for Heck declined to comment further.
For many in the industry, changes to banking regulations are not happening quickly enough.
“Without access to basic banking services, many legitimate cannabis businesses are forced to manage sales, payroll, and even tax bills entirely in cash,” said Aaron Smith, executive director of the National Cannabis Industry Association. “That puts their customers, employees, and fellow community members at completely unnecessary risk.
“Everyone agrees that the situation is untenable; the Treasury Department and the Department of Justice must act and act quickly. The tide of public opinion is turning ever more quickly in support of regulated marijuana markets and, in 2014, at least six states will be implementing new regulations for these markets.
“It is long past time for the federal government to stop putting citizens in harm’s way by denying legally recognized businesses access to secure banking services.”
Still, despite all of the excitement from those in the marijuana industry, many larger banks appear unconvinced that the federal government’s word is enough to keep them protected legally.
Rob Rowe, vice-president and senior counsel at the American Banking Association, expressed concern about the federal government issuing a guidance memo instead of rescheduling marijuana, explaining that those in the banking industry are worried if they do decide to partner with those in the budding industry, the DOJ’s decision to tolerate banks’ partnerships with marijuana-related businesses may be a bust.
“Guidance can change in 24 hours. Banks are very leery of the industry,” Rowe said. “One of the things bankers tell me is you never know when a prosecutor will go after banks for violating federal law by aiding and abetting criminal activity.”
Don Childears, CEO of the Colorado Bankers Association, agreed it was concerning that the Treasury Department would only be issuing a guidance, since he says “Banks are responsible to regulators, most of which are independent and uncontrolled by the president’s executive branch.
“The idea of prosecution is nice, but to banks, regulators have the real power,” Childears said.
“The only real solution is an act of Congress, which isn’t likely in the near future, though needed. Elections can bring a change in guidance – and Holder’s directive would be the fourth Department of Justice formal position on marijuana in recent years. Put simply: banks need the permanence of law versus changeable guidance.”