WASHINGTON -- The federal government issued guidelines on Friday that officials said were intended to increase the financial services available to marijuana businesses that are legal under state laws.
Guidelines announced by the Treasury Department and a memo from a top Justice Department official were intended to ease concerns that the federal government would target banks working with marijuana-related businesses that are legal and regulated on the state level. Expanded banking access will enable them to function like traditional businesses, and implementing a reporting structure will allow the federal government to take a close look at how they operate.
Under the Treasury Department's plan, banks would file a "suspicious activity report," or SAR, for a wide range of financial transactions by any marijuana-related business, but they would specify that they did not believe illegal activity beyond simply dealing in the marijuana trade was taking place.
The Justice Department memo falls short of expressly protecting banks that work with state-compliant marijuana businesses from prosecution. It states only that banks working with businesses that don't violate one of DOJ's eight areas of concern related to the pot trade, like distribution of marijuana to minors, violence and the use of firearms, are less likely to be targeted by federal prosecutors.
"If a financial institution or individual offers services to a marijuana-related business whose activities do not implicate any of the eight priority factors, prosecution for those offenses may not be appropriate," Deputy Attorney General James Cole wrote in the memo, which was sent to federal prosecutors across the country on Friday.
While the phrase "may not be appropriate" falls far short of what the marijuana lobby and financial institutions were hoping for -- and the Cole memo didn't state outright that the move was meant to expand banking access for pot shops -- DOJ officials said easing the financial threat to marijuana businesses working in a cash-only environment was their intent.
"The Department shares the concerns of public officials and law enforcement about the public safety risks associated with businesses that handle significant amounts of cash," Justice Department spokeswoman Allison Price said in a statement. "These guidelines, together with the Treasury Department's guidance to financial institutions, are intended to increase the availability of financial services for marijuana businesses -- that are licensed and regulated -- while at the same time preserving and enhancing important law enforcement tools."
State-legal, state-licensed marijuana businesses often don’t have access to traditional banking, and cannot accept credit cards or open simple checking accounts, due to banks' fears that they could be implicated as money launderers. The businesses are forced into cash-only transactions, putting the retailers' safety at risk and creating issues involving taxes and employee payroll.
Treasury officials, based on their conversations with financial institutions, said they anticipated that the guidelines could encourage smaller and medium-sized banks to deal with marijuana businesses.
“While we appreciate the efforts by the Department of Justice and FinCEN, guidance or regulation doesn’t alter the underlying challenge for banks," said Frank Keating, the president and CEO of the American Bankers Association. "As it stands, possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution and assorted sanctions.”
Richard Riese, vice president of compliance at the ABA, told The Wall Street Journal that bankers are concerned about the legality of working with federally illegal businesses and have questions about how to effectively scrutinize the transactions made.
Bank of America’s policy, for example, has been to not accept any marijuana businesses as customers, and it’s unclear if the guidance proposed is enough to change that.
Currently, 20 states and the District of Columbia have legalized some form of marijuana, be it medical or recreational. The legal marijuana industry is expected to grow to $2.3 billion in 2014 in the U.S.. One study suggests that figure could balloon to over $10 billion by 2019.
“This is an important step,” Rep. Ed Perlmutter (D-Colo.), sponsor of the Marijuana Businesses Access to Banking Act, said in a statement. But Perlmutter also noted that the guidance doesn’t alleviate all liability for financial institutions interested in doing business with marijuana businesses.
“We need Congress to promptly consider and pass my legislation to provide certainty for financial institutions and the licensed marijuana related businesses to operate just like any other business,” Perlmutter added.
Rep. Jared Polis (D-Colo.), a co-sponsor of Perlmutter's banking legislation and sponsor of the Ending Federal Marijuana Prohibition Act, called the guidelines a "huge step in the right direction," but said the federal government's continued stance that marijuana is one of the "most dangerous" drugs needs to be reconsidered.
"The only true way to protect these small business owners is to remove marijuana from the list of schedule 1 narcotics," Polis said.
Dan Riffle, director of federal policies for Marijuana Policy Project, agreed that more needed to be done to resolve the conflicts between federal and state marijuana law.
"Rather than forcing federal agencies to work around our broken marijuana laws, Congress needs to act to permanently fix these problems by ending federal marijuana prohibition and allowing states to regulate marijuana in a manner similar to alcohol," he said.
The Treasury Department guidance:
The Justice Department memo:
Before You Go
“I think that most small amounts of marijuana have been decriminalized in some places, and should be," he said back in 2000 in an interview with Rolling Stone. "We really need a re-examination of our entire policy on imprisonment.”
He's since spoken about the issue of marijuana and drug prohibition a number of times. Last year, he appeared in the documentary, "Breaking the Taboo," where he argued that the war on drugs has been a failure.
“I don't want to promote that but I also don't want to put people in jail who make a mistake," Paul said. "There are a lot of young people who do this and then later on in their twenties they grow up and get married and they quit doing things like this. I don't want to put them in jail and ruin their lives."
"I really believe we should treat marijuana the way we treat beverage alcohol," Robertson said in an interview with The New York Times in 2012. "I've never used marijuana and I don't intend to, but it's just one of those things that I think: this war on drugs just hasn't succeeded."
Robertson has made similar remarks on his "700 Club" show before, but the Times, like many others, perhaps felt they must have misheard him.
“[T]o me, marijuana is no different than wine," he said in an interview with High Times. "It's a drug of choice. It's meant to alter your current state -- and that's not a bad thing. It's ridiculous that marijuana is still illegal. We're still fighting for it ... It comes down to individual decision-making. There are millions of people who smoke pot on a social basis and don't become criminals. So stop with that argument -- it doesn't work.”
[H/T Marijuana Majority]
From his campaign platform:
"By managing marijuana like alcohol and tobacco - regulating, taxing and enforcing its lawful use - America will be better off. The billions saved on marijuana interdiction, along with the billions captured as legal revenue, can be redirected against the individuals committing real crimes against society."
“Marijuana should not only be legal, I think it should be a cottage industry," he said in an interview with High Times. "My wife says, and I agree with her, that what would be really great for Maine would be to legalize dope completely and set up dope stores the way that there are state-run liquor stores.”
[H/T Marijuana Majority]
While marijuana has been made legal for various uses in a number of states, the Obama administration continues to enforce federal laws across the nation. This has led to numerous raids of marijuana-based businesses, as well as prosecutions of growers and other people involved in pot.
"I think it's about time we legalize marijuana," he said. "We have to make a choice in this country. We either put people who are smoking marijuana behind bars or we legalize it, but this little game we're playing in the middle is not helping us, it is not helping Mexico and it is causing massive violence on our southern border."
"Decriminalization does not result in increased drug use. Portugal's 10 year experiment shows clearly that enough is enough. It is time to end the war on drugs worldwide. We must stop criminalising drug users. Health and treatment should be offered to drug users - not prison. Bad drugs policies affect literally hundreds of thousands of individuals and communities across the world. We need to provide medical help to those that have problematic use - not criminal retribution."
"I don't tend to say this publicly, but we can see it's a curative thing. The narcotics industry is also enormous. It funds terrorism and - this is a huge problem in America - fuels the foreign gangs," he said. "More than 85 percent of men incarcerated in America are on drug-related offences. It costs $40,000 a year for every prisoner. If they were really serious about the economy there would be a sensible discussion about legalization."
While Obama and his administration have responded to state marijuana reforms by saying they must enforce federal laws against marijuana, the president has the power to reschedule the drug, which would allow federal authorities to shift resources away from a prohibitive approach.
"However, I think we need to prioritize our law enforcement efforts," Palin said. "If somebody's gonna smoke a joint in their house and not do anybody any harm, then perhaps there are other things our cops should be looking at to engage in and try to clean up some of the other problems we have in society."While Obama has spoken repeatedly about not being interested in prosecuting small-time marijuana users, he hasn't done anything to prevent them from being busted by law enforcement in states where the drug is still illegal.
In 2012, the former president said he was fine with state legalization efforts, though he himself doesn't necessary support legalizing the drug.
“As president 35 years ago I called for decriminalizing -- but not legalizing -- the possession of marijuana,” Carter said. “Since then, U.S. drug policies have been very horrible to our own country because of an explosion in prison populations.”
"I don't have a problem with states experimenting with this sort of thing I think that's the role of states," Cuccinelli said, according to Ryan Nobles of WWBT.
“The proof will be in the policy. The war on drugs has gotten a really bad rap, when you ask people if they support the war on drugs they say no ... [Obama's] budget once again has the same old drug warrior policy ... I reject the assumption that everybody who is using drugs needs treatment or is an addict and needs to get arrested ... Not all drug use is abuse.”
He's kept up the fight for drug policy reform since.
[H/T Marijuana Majority]
“We've been fighting the war on drugs since the '60s. And guess what? Trillions of dollars later, we are losing," Sharpton said during a segment on MSNBC. "When you look at the disparities in sentencing drug offenders, hasn't this kind of injustice undermined the legitimacy of our criminal justice system?”
[H/T Marijuana Majority]
Tancredo continued, “The arguments against marijuana today are the same as the arguments against liquor years ago.”
Years later, the former congressman agreed to smoke pot on camera with a documentary filmmaker, a deal that he later backed out of.