Holder: US To Adjust Rules to Allow Banks to Handle Legal Marijuana Money
US Attorney General Eric Holder announced Thursday that legal marijuana businesses should have access to the banking system, and that the US Treasury and law enforcement agencies will soon enact regulations allowing such enterprises to do so.
The New York Times reports the new rules probably won’t allow banks to accept deposits from state-legal marijuana businesses or offer them other services, but rather would instruct prosecutors to assign lower priority to cases involving legal marijuana enterprises that utilize banks.
Reuters reports state-legal medical and recreational marijuana businesses in Colorado, which fully legalized cannabis in a 2012 ballot initiative, have been complaining about having to purchase inventory, conducts sales, and pay employees entirely in cash, necessitating more security and significantly increasing the risk of violent robbery.
“You don’t want just huge amounts of cash in these places,” Holder said of the businesses during a speech at the University of Virginia on Thursday. “They want to be able to use the banking system.”
“There’s a public safety component to this,” the attorney general added. “Huge amounts of cash, substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited, is something that would worry me, just from a law enforcement perspective.”
What worries others from a law enforcement perspective, for various reasons, is the fact that marijuana remains classified by the Drug Enforcement Administration (DEA) as a Schedule I drug, meaning it has “no currently accepted medical use and a high potential for abuse.” The DEA calls Schedule I substances “the most dangerous drugs of all the drug schedules.” Other schedule I drugs include heroin, LSD and ecstasy. Cocaine and methamphetamine, by comparison, are Schedule II drugs, meaning the federal government officially believes marijuana is more dangerous than those highly addictive substances.
The forthcoming rules will help banks decide what sort of relationship to have with legal marijuana enterprises. Most financial institutions remain wary of doing business with such enterprises. What is not clear is whether the new regulations will apply to all states that have legalized medical and recreational marijuana or only Colorado and Washington, the states where recreational use is now permitted by law.
Anti-drug activists said banking rules for the marijuana industry were beside the point.
“We are in the midst of creating a corporate, for-profit marijuana industry that has to rely on addiction for profit, and that’s a much bigger issue than whether these stores take American Express,” Kevin Sabet, co-founder of the anti-legalization group Smart Approaches to Marijuana, told Reuters.
The Obama administration has had a mixed record on marijuana. While Barack Obama promised a “hands-off” policy towards state-legal cannabis as a presidential candidate in 2007-08 and his Justice Department (DOJ) issued the Ogden memo, which seemingly affirmed this pledge, the DOJ then initiated a crackdown on medical marijuana dispensaries that has resulted in many closures and created an atmosphere of fear and uncertainty among proprietors and patients alike. Marijuana activists and advocates have been largely disappointed by the Obama administration.