Sun, Feb 16, 2014 - Page 13 News List

US to allow banks to do business with pot shops


A bag of marijuana that is being prepared for sale sits next to a money jar at BotanaCare in Northglenn, Colorado, on Dec. 31 last year.

Photo: Reuters

US President Barack Obama’s administration on Friday issued new law-enforcement guidelines aimed at encouraging banks to start doing business with state-licensed marijuana suppliers, like those in Colorado, even though such enterprises remain illegal under federal law.

Administration officials said the policy shift seeks to address problems faced by newly licensed recreational marijuana retailers in Colorado, and medical cannabis dispensaries in other states, that must operate on a cash-only basis, without access to financial services or credit.

It remained to be seen whether many banks would feel sufficiently assured by the new policy, which the US Justice and Treasury departments outlined in writing to federal prosecutors and financial institutions nationwide.

The guidance stopped short of promising immunity for banks, but it said criminal prosecution for money laundering and other crimes is unlikely if banks meet a series of conditions, such as avoiding business with marijuana operations that sell to minors or engage in illegal drug trafficking.

If banks turn a blind eye to illegal activity by failing, for example, “to conduct appropriate due diligence of the customers’ activities, such prosecution might be appropriate,” US Deputy Attorney General James Cole said in the memorandum.

The memo builds on guidelines issued in August last year, when the administration promised new leeway to states experimenting with legalization of marijuana, saying it would focus enforcement against pot suppliers found to be operating outside of state regulation or as a front for outlawed narcotics trade.

The latest directive is designed to address public safety issues raised by legitimate, state-licensed cannabis suppliers’ lack of access to financial services, officials said.

Proprietors of state-permitted marijuana distributors in Colorado and elsewhere have complained of having to purchase inventory, pay employees and conduct sales entirely in cash, requiring elaborate and expensive security measures and putting them at risk of robbery.

It also has made accounting for state sales tax collection difficult.

Last month, Colorado became the first state to open retail outlets legally permitted to sell marijuana for recreational purposes.

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