Holder: Banks Should Be Able To Handle Pot Money

The biggest problem for the booming legal marijuana industry today is where to put its piles of cash. The nation's top law enforcement official is now encouraging a solution

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Nick Adams / REUTERS

Marijuana is broken up for use by customers at Frankie Sports Bar and Grill in Olympia, Washington, on Dec. 9, 2012

The federal government is preparing to address the biggest problem facing the nation’s marijuana industry. U.S. Attorney General Eric Holder said Thursday that legal marijuana sellers should have access to banks, and he indicated the Justice Department was preparing guidelines that would help pot shops cope with the challenge of running their businesses in cash.

The announcement reflects federal recognition of the central impediment to legal marijuana businesses. In Colorado, which on Jan. 1 became the first state to establish a recreational marijuana market, as well as the 20 states (plus the District of Columbia) that allow medical marijuana, legal cannabis businesses are forced to hoard cash because federal law prohibits banks from transacting with them. As a result, marijuana moguls who comply with state regulations and pay huge sums in taxes must keep massive amounts of cash on hand and take extreme measures to keep the money and themselves safe.

“You don’t want just huge amounts of cash in these places. They want to be able to use the banking system,” Holder said during a discussion at the University of Virginia. “There’s a public safety component to this. 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.”

As I wrote in the print edition of TIME this month (subscription required), the conflict between state and federal law requires small-business entrepreneurs—a cohort that Washington loves to venerate—into acrobatic subterfuge reminiscent of a Scorcese film: leasing secret warehouses to house stacks of bills, darting through alleys with tens of thousands in cash, scrambling delivery schedules to sidestep robberies. While some owners have tenuous accounts at banks, most are forced, in essence, to operate their own. “We call it the Bank of Kristi,” says Kristi Kelly, the owner of multiple retail dispensaries in Colorado, who spends much of each week dealing with the logistical puzzle of transporting cash. “The Bank of Kristi has multiple branches. The Bank of Kristi has service hours.”

Holder’s announcement was not unexpected. Prodded by Colorado officials, sympathetic congressmen, and banking representatives eager for federal guidance, a cadre of officials met privately in Washington last month to address the legal conflict. Industry sources believe the issue will be addressed early this year. Holder’s remarks were a public reminder that the process is underway. “It is an attempt to deal with a reality that exists in these states,” Holder said.

But a yellow light from the Justice Department may not be enough. As long as pot remains a so-called Schedule I drug on par with ecstasy and heroine, banks have plenty to lose by transacting with marijuana companies. Even with a signal that the feds won’t pursue them, banks could still face punishment from zealous prosecutors, or be forced to surrender their charter for violating federal money-laundering statutes. “Everyone has taken a position that it’s just too risky,” Robert Rowe, a lawyer for the American Bankers Association, told me recently. And the nature of the guidance remains to be seen.

A Colorado law-enforcement official says it is possible that the expected federal guidance, which could resemble a 2013 memo that indicated the federal government would take a hands-off approach to the retail pot experiments as they unfolded in Colorado (and, later this year, Washington state), might entice state-level banks to take the plunge, while risk-averse national banks stay away. An act of Congress may still be required to fully resolve the issue.

A passel of legislators in Colorado and Washington have pressed for clarity. (Most are Democrats, but the group also includes House Republican Mike Coffman of Colorado—a reflection of how the issue transcends partisan lines, with many Republicans opposed to federal meddling in what they see as a states’-rights issue.) “Attorney General Holder and the Obama Administration are unquestionably making the right call by allowing banks to work with legal marijuana businesses,” said Representative Earl Blumenauer, an Oregon Democrat. “If these businesses are unable to participate in the banking system, they have to operate with all cash, which invites criminality. It’s an important step toward fixing federal policy toward marijuana.”

The Colorado cannabis industry hailed Holder’s announcement. “Everyone recognizes that the banking issue has created serious public safety and accountability problems for this new industry,” said Mike Elliott, executive director of the Medical Marijuana Industry Group. “We urge Mr. Holder, the Treasury Department, and the Obama Administration to move quickly to create regulations that allow the legal marijuana industry, its employees, and customers to do business with banks just as any other business sector does.”

19 comments
Paulpot
Paulpot

Wachovia bank was caught out with 420 billion (yes I laughed too). 

HSBC (the original narco-bank handled the opium business between Britain and a conquered China) was caught out with 680 billion. 

That's 1.1 trillion between just 2 banks. 

They were fined about 2 billion in total, that about half a percent. 

That's not a fine. That's not even a money laundering fee it's so puny. 

There has been some serious corruption by both banks and officials that needs to be investigated.

malcolmkyle16
malcolmkyle16

Can't happen soon enough!


Ending the insanity of drug prohibition by legalized regulation, respecting the rights of the responsible users, and focusing on addiction as a sickness (just like we do with alcohol and tobacco), may save what remains of our economy and civil institutions, along with countless lives and livelihoods. Prohibition continues unabated for shameful political reasons. It cannot, and never will, reduce drug use or addiction.


Prohibition has permanently scarred our national character as well as our individual psyches. Our national policies and cultural practices have become pervaded by the fascist/prohibitionist mind-set. A mind-set that has turned our domestic police force into a bunch of paramilitary thugs, who often commit extra-judicial beatings and executions while running roughshod over our rights in order to "protect us from ourselves". 


When we eventually manage to put the horrors of this moronothon behind us, we'll need to engage in some very deep and honest soul-searching as to what we want to be as a nation. Many of our freedoms have been severely circumscribed, or lost altogether. Our economy has been trashed and our international  reputation for being "free and fair" has been dragged through a putrid sewer by vicious narrow-minded drug warrior zealots who are ignorant of abstract concepts such as truth, justice and decency. We'll need to make sure that such a catastrophe is never ever repeated. This may mean that public hearings or tribunals will be held where those who’ve been the instigators and cheerleaders of this abomination will have to answer for their serious crimes against our once prosperous and proud nation.

absurdbuttrue
absurdbuttrue

Another federal law not being enforced by Obamaroid and his henchmen.


History will record this as the most corrupt regime in American history, bar none.

ShepherdYerusalem
ShepherdYerusalem

Number of American deaths per year that result directly or primarily from the following selected causes nationwide, according to World Almanacs, Life Insurance Actuarial (death) Rates, and the last 20 years of U.S. Surgeon Generals' reports.



TOBACCO - 340,000 to 450,000

ALCOHOL  (Not including 50% of all highway deaths and 65% of all murders) - 150,000+

ASPIRIN  (Including deliberate overdose) - 180 to 1,000+

CAFFEINE  (From stress, ulcers, and triggering irregular heartbeats, etc.) - 1,000 to 10,000
"LEGAL" DRUG OVERDOSE  (Deliberate or accidental) from legal, prescribed or patent medicines and/or mixing with alcohol - e.g. Valium/alcohol - 14,000 to 27,000
ILLICIT DRUG OVERDOSE - (Deliberate or accidental) from all illegal drugs - 3,800 to 5,200
MARIJUANA - 0 


(Marijuana users also have the same or lower incidence of murders and highway deaths and accidents than the general non-marijuana using population as a whole. Cancer Study, UCLA; U.S. Funded ($6 million), First & Second Jamaican Studies, 1968 to 1974; Costa Rican Studies, 1980 to 1982; et al. LOWEST TOXICITY 100% of the studies done at dozens of American universities and research facilities show pot toxicity does not exist. Medical history does not record anyone dying from an overdose of marijuana (UCLA, Harvard, Temple, etc.)


RB1
RB1

I'm not completely sold on Pot being necessarily good for everybody. I seriously believe that there can be excess, based upon individual aspects. But it is time to change some laws about its usage and criminal components. We also need to seriously restart new research (unbiased) on what can be beneficial or harmful about its usage. The issue of banking is really a no-brainer! Who in their right mind actually like the idea of encouraging the prospects of robbery, murder and laundering money into the system. We should create a method to secure this money into a legal and taxable system, that contributes to all of this country. After all, hasn't it been proven that the major banking systems in this country have been laundering drug cartel money for years! And from what I understand this money isn't just Pot money, but every hard drug made, sex trade, murder and every other vise known to man! 

DaveK_AZ
DaveK_AZ

A memo is too easily rescinded as has happened when the feds ignored the ones that were written and raided dispensaries that were in compliance with state law in California.  Removal from schedule one would be an important step.  I would like to see our president who considers marijuana to be no worse than alcohol remove marijuana from schedule one down to schedule three.  This would solve many of the problems that states will face and is a far better solution than waiting for congress to act.  

DougPederson
DougPederson

Prohibitionists think we should lose our freedom family & fortune because of pot; and feel we should be OK with them thinking that.
 
Prohibitionists have no heroes (witness Ted Cruz) just liars, fibbers and stupid's. Our side has thousands of heroes. Marc Emery is my favorite
 
Prohibitionists are condescending judgementalists - every perceived personality flaw they see; is somehow related to pot.
 
Prohibitionists are terrified at the possibility that Pot is a (performance / life) enhancing herb. They do like the falsehood that Pot dumbs peoples senses
 
Prohibitionists will be lumped in with the temperance league (of alcohol prohibition) when it comes to smarts. Only they will be considered even stupider. The temperance league were right on a few points. Like violence and physical damage
 
Prohibitionists are sure they know more about Cannabis than someone that has spent their whole life with the Marijuana plant.
 
Prohibitionists especially the intelligentsia can't imagine they were lied to and have been wrong all their lives
 
Prohibitionists talk about stupid stoners. You won't find anything dumber than a Drunk. That is another Marijuana fact.
 
Prohibitionists think that the Legalization crowd are the ones that are lying.
 
Prohibitionists are afraid of legalization because when they don't toke up with their friends; they will know that they were talking behind their backs and were Judgmental Condescendings
 
Prohibitionists will say there are downsides to everything. "NAME THEM" I bet you can't name any.
 
Prohibitionists try and switch the topic to other drugs when they don't have a leg to stand on when discussing pot.
 
Prohibitionists think everyone that doesn't agree with them is trolling
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harte.ryan
harte.ryan

Nothing changes the opinions of American lawmakers faster then financial windfalls. 

Yacko
Yacko

What do we mean by banks? Small banks, local banks, well, okay, I guess… But big banks? I say keep the money away from them. Marijuana was/still is a "pirate" industry and there is no reason to suddenly reward the establishment. Security is a minor expense compared to losing your dignity to a large bank. Are you doing without a revolving line of credit like most businesses have? Then why give the bank the money? If you really need a bank, form a security consortium with your fellow marijuana merchants and state charter your own bank. Take that feds.

joedawg82
joedawg82

Long overdue. This should have happened the minute dispensaries popped up over a decade ago. Props to the president, I can't stand the guy but he finally is doing the things that need to be done with regards to this issue. Bravo. 

PhillyCannabis
PhillyCannabis

This is a big deal. Cannabis shops were stacking their money instead of putting them in the bank. Which is absurd. I have been in cannabis legalization activist for 20 years. And I am caught off guard how quickly things are turning around. Granted their are a few states that hand out life sentences for cannabis only(a crime against humanity). So we still have a lot of work to do.

whoisjohngalt58
whoisjohngalt58

time to remove from Schedule I and either remove it from the schedule or classify it like booze.

PaulLagoon
PaulLagoon

This is definitely going to get the "other" States attention. I smell Freedom on it's way.

JosephCWren
JosephCWren

@absurdbuttrue 

You are all dying off Mr Dinosaur.      History will remember this as the most liberating time of our democracy.

Frediano
Frediano

@ShepherdYerusalemSo, the incomplete products of tobacco combustion, through a filter, are causing throat and mouth and lung cancer, but the incomplete products of hooch combustion do not.   Like magic.


I'm all for the legalization of hooch.  But I'm equally for the legalization of tobacco.

BlondeWonder69
BlondeWonder69

@whoisjohngalt58I hope they don't classify it like booze as booze is more dangerous, but making it recreational legal would be a great start!

sacredh
sacredh

@JosephCWren, and President Obama will be remembered as being the one to make sanity fashionable again. Gays/lesbians being alowed to serve openly and many states finally recognizing that a married couple can be the same sex. The Lilly Ledbetter law that make it illegal to pay women less for the same work, diversifying the Supreme Court and giving the uninsured the chance to get healthcare coverage without being denied because of a pre-existing condition. Obama has made America a place that is on the road to treating it's citizens equally. The right hates that.