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News & Music Contributors
Fri February 14, 2014
Feds Clear Way For Banks To Do Business With Marijuana Industry
Marijuana businesses in Washington may soon be able to open a bank account. The Obama administration on Friday issued new guidance to banks regarding drug proceeds.
The three-page memo by the Department of Justice signals that banks that do business with licensed, above-board marijuana businesses likely won’t face prosecution.
Rep. Denny Heck, D-Wash., welcomed the news.
"It’s a giant step forward in the effort by Washington state to stand up a well-regulated marijuana market,” Heck said.
“You can’t have people walking around with bags of cash, trying to find someone who will take it as a deposit or trying to pay their taxes or fees," added Rick Garza, who heads Washington’s Liquor Control Board. "So this provides the services that all our licensees will need for financing."
The question is how many banks will be willing to work with marijuana businesses without clear protection under the law. Garza says he’s confident that enough will to meet demand.
Currently, processing money from marijuana sales puts federally insured banks at risk of drug racketeering charges, so they've refused to open accounts for marijuana-related businesses.
Friday's move was designed to let financial institutions serve such businesses while ensuring that they know their customers' legitimacy and remain obligated to report possible criminal activity, said the Treasury Department's Financial Crimes Enforcement Network, or FinCEN.
Cannabis lawyer Robert McVay of Canna Law Group said he would advise his clients to start banking.
“I would advise my clients to know what you’re getting into, but go ahead and get the bank account. It’s not that dangerous, and frankly, the industry is safer the more people come out into the open and do things publicly,” he said.
The Washington Bankers Association says the guidance is an “important first step,” but the decision to open accounts for marijuana businesses will be made on a bank-by-bank basis.
“It’s an important signal from the federal government,” said Denny Eliason, a lobbyist for the Washington Bankers Association. “This guidance is not without complication, though, so every bank will have to view it in the context of what they’re capable of.”