Friday’s joint announcement by theJustice Department and a division of the U.S. Treasury might not bean outright Valentine’s Day gift to the nation’s marijuana industry,but advocates forlegal cannabis use see it as a step in the right direction.
That announcement issued guidance for financial institutions seeking to provide servicesto marijuana businesses, with the aim of promoting “greater financialtransparency in the marijuana industry and mitigate the dangersassociated with conducting an all-cash business.”
While medical marijuana use has beenlegalized in 20 states and the District of Columbia and while recreationalmarijuana use became legal for adults earlier this year in WashingtonState and Colorado, cannabis remains illegal under federal law.That’s why most banks and other financial organizations, fearful ofrunning into federal charges, have ruled out transactions withmarijuana businesses.
“Guidance or regulation doesn’talter the underlying challenge for banks,” FrankKeating, president and CEO of the American Bankers Association,said in a press statement onFriday. “As it stands,possession or distribution of marijuana violates federal law andbanks that provide support for those activities face the risk ofprosecution and assorted sanctions.”
TheColorado Bankers Association (CBA) believes Friday’sguidance simply reiterates federal regulators’ current stance on marijuana laws. “Infact, it is even stronger than original guidance issued by theDepartment of Justice and the Treasury,” CBA president and CEO DonChildears said in a press statement.
“Aftera series of red lights, we expected this guidance to be a yellowone,” he continued. “This isn’t close to that. At best, thisamounts to ‘serve these customers at your own risk’ and itemphasizes all of the risks. This light is red.”
TheCBA is supporting a Houseof Representatives bill, sponsored by Ed Perlmutter, D-Colo., that would stop federalregulators from “prohibiting, penalizing, or otherwisediscouraging” banks that provide financial services tomarijuana-related businesses in states that legalize and regulate cannabis.
Bothbankers and marijuana industry advocates are also concerned that thefederal government’s current liassez-faire attidude about”legal” cannabis may change dramatically following the 2016presidential election.
“Policychanges can be changed later on,” said MuracoKyashna-tochá, founderof Seattle’s Green Buddha, one of the oldest medical marijuanadispensaries in Washington. “So we get a Republicanadministration … in two years; does that spell problems for ourindustry?”
ButKayvan Khalatbari, co-owner of the Denver Relief medical marijuanadispensary, thinks the current federal guidance is a baby step in theright direction. “Istill don’t believe this is going to bring most large banks on,” hesaid, “but it will probably make some smaller banks feelcomfortable enough with taking on the additional risk of carryingaccounts by folks in this industry.”
Many cannabis operations say they’re waiting impatiently to open alegitimate company bank account.
“Cashis nice enough until you have too much of it, and then all of thesudden it looks different,” said Elliott Klug, CEO atColorado’s Pink House medical marijuana dispensaries. “And cashisn’t going away, it’s just going to hopefully become a smallerpercentage of our income.”
In the long-term, Klug added, allowing banks and other financialinstitutions to transact with cannabis-related busineess is “goingto mean more investment in the industry. It’s going to be greateropportunities to build real, full businesses — not that we’re notreal businesses now. But you can really build to scale, and growlike a normal business.”