Some Banks Will Hold Back: Nadelmann

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Feb. 14 (Bloomberg) –- Drug Policy Alliance Executive Director Ethan Nadelmann and Bloomberg’s Peter Cook discuss the treasury allowing banks to accept accounts from pot businesses. They speak to Trish Regan and Alix Steel on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

That a little bit more.

Stay with us.

Also joining us is the executive director of the joint policy alliance.

Peter brings up an important point.

It is one thing for eric holder to advise treasury to change the rules, but it is another thing for wells fargo and bank of america to say yes, we are going to allow this drug money to have an account with us.

Are they really going to buy into this?

Do you think they trust what the government is saying?

Its business and they can make money.

Banks can make money by dealing with the legal medical marijuana industry.

I think some will dip their toe in the water and begin to do it.

When they see that federal prosecutors don't respond, more will go win.

This is one of the issues.

I met a guy who got into the business, thought he was fine, talked about it a little bit on the local tv station in the next thing he knew the feds were busting him down the next morning.

When i met him he was wearing an ankle bracelet.

He was basically stuck in his home.

And on his way to jail.

This was in colorado before the legalization.

That's the point.

The world has changed so much.

Look at the obama administration which was sort of an example are on -- of bad faith on drug policy in the first term.

He sort of did a 180. but how can you guarantee that will stay?

There are three more years to go.

Other states are going to legalize the stuff.

There are also questions about what congress is going to do and where that leads congress.

The tone we heard from the president in the new yorker institute, i think ethan is right.

The genie is out of the bottle.

It is hard to imagine this is going to roll back or the other direction unless something goes horribly wrong in colorado and washington.

Critics are watching carefully for exactly that to happen, but the genie is out there.

It is not just colorado and washington.

20 states have legalized it for medical.

Florida and new york may boast do the same thing -- both do the same thing this year.

Florida has an initiative in new york has a good chance.

You're talking about the majority of the population living in states where this is legal.

What you estimate this business to be?

We are in the beginning stages of a transition from an entirely illegal industry to an entirely legal industry.

The total value in the united states?

20 billion dollars?

$30 billion?

Nobody knows for sure.

Phillip morris is struggling with tobacco sales.

Will they want to diversify?

It's a good question.

I think tobacco and alcohol are on the sidelines right now.

But they see things emerging and i think they're hoping maybe a day will come when they can grab their share.

I have met so many dispensary owners in colorado that are hoping for exactly that.

They are hoping this goes the way of prohibition.

All these small distilleries got bought by bigger conglomerates.

I am personally looking for the microbrewery model.

I just want to ask if ethan thinks the guidance goes far enough.

The head of the colorado banking association was pushing for this.

Does this go far enough?

They said here is federal law.

Here is what is going on.

Now, do the best you can.

Make this work in colorado and washington given federal law.

I think the obama administration pushed the envelope to make this work.

And just remind people how difficult it is for some of these dispensary owners.

If you are in a cash only system, that means you have to pay everyone on your staff in cash.

Your customers can only pay cash.

And then they have the added bonus of having to deal with all this cash.

They can actually smell.

If the banks smell marijuana on a -- they go to very elaborate measures.

You have to pay for security and armed guards to move

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