Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Friday, February 21, 2014

Banks suggest recent federal banking guidance changes nothing (and they’re probably right)

The Colorado Bankers Association, an organization counting many prominent national and local banks as members, is very skeptical (to put it mildly) of the banking guidance issued by the DOJ and Treasury Valentine’s Day. My earlier posts on the guidance can be found here and here.

In a nutshell, the CBA suggests the guidance does nothing to ease bank fears over dealing with the state’s marijuana industry and that only a change to federal laws could really accomplish that. A statement issued from the CBA’s President, Don Childears, can be found here. Here’s a snippet:

“The guidance issued today by the Department of Justice and the U.S. Treasury only reinforces and    reiterates that banks can be prosecuted for providing accounts to marijuana related businesses.

“In fact, it is even stronger than original guidance issued by the Department of Justice and the Treasury . . . After a series of red lights, we expected this guidance to be a yellow one. This isn’t close to that. At best, this amounts to ‘serve these customers at your own risk’ and it emphasizes all of the risks. This light is red.”

“Bankers had expected the guidance to relieve them of the threat of prosecution should the open accounts for marijuana businesses, but the guidance does not do that. Instead, it reiterates reasons for prosecution and is simply a modified reporting system for banks to use. It imposes a heavy burden on them to know and control their customers’ activities, and those of their customers. No bank can comply.”

“An act of Congress is the only way to solve this problem. . . ”

I agree. Earlier DOJ guidance suggesting it wouldn’t crack down on marijuana distribution was probably sufficient to get people to distribute the drug in Colorado (in reality, it probably wasn’t even necessary to achieve that). But guidance suggesting the DOJ might not crack down on money laundering offenses falls well short of what highly regulated banks are going to need before they start dealing with this industry.

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