Legal Pot Businesses Get One Step Closer to Bank Accounts

Banking rules may finally be relaxed a little as the government tries to deal with the conflicting laws that keep legal marijuana-related companies trapped in a cash economy and locked out of the financial system.

As things stand now banks won’t take pot businesses as customers because marijuana is still illegal under federal law, but as Colorado and Washington open up their legal markets for recreational pot and other states allow more medical usage, that cash-only existence is becoming untenable. The problem has proven intractable enough that a state lawmaker in Washington wants to start a state-run bank for pot businesses so they don’t need to depend on cash. But banks may finally get some tacit approval from the federal government to take on pot customers. In a speech yesterday, Attorney General Eric Holder said the Justice Department will soon provide official guidance to allow marijuana banking.

“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,” the New York Times reports. This thread-the-needle approach echoes what the Justice Department said about criminal prosecutions in what’s known as the “Cole Memo.” That August 2013 document from Deputy Attorney General James Cole said while pot is decidedly not legal under federal law, the department won’t bring cases against businesses or users operating legally under state laws.

The legal marijuana industry, as well as state and local government officials, have been asking for the federal government to let banks take their money. The Washington Bankers Association has a laundry-list (PDF) of legal considerations that have kept banks from knowingly handling pot money. Getting some kind of go-ahead from the Justice Department is a key part of what it will take for banks start taking pot payments, but banks also answer to their own financial regulators who keep tabs on their efforts to prevent money laundering.

The understand the scope of the number of agencies with some enforcement role on this topic, look at an October letter (PDF) from governors of Colorado and Washington. The governors wrote to six regulators—Treasury Department, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Federal Reserve, Consumer Financial Protection Bureau, and the National Credit Union Administration—asking them to coordinate with three other agencies—Financial Crimes Enforcement Network, the Office of Foreign Asset Control, and the Criminal Division of the Internal Revenue Service—to give the necessary approvals. Even if they all joined the Justice Department’s approach, some banks could still be too shy to enter the business.

But even if only a few prove be willing to give it a go, that might be all pot businesses need to start getting out of the cash economy.

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