Thursday, February 20, 2014

banks still redlining weed bidnis


usatoday | The marijuana industry just got a critical boost in its effort to become a massive and completely legitimate business.

On Friday, two federal law-enforcement agencies released coordinated statements clearing the way for banks to take deposits from and offer financial services to marijuana producers and retailers without fear of prosecution for money laundering.

To say that this will ignite a revolution in the still upstart industry would be an egregious understatement.

"It is imperative that this legal industry have access to banking the same as every other business sector," said Mike Elliot, executive director of the Medical Marijuana Industry Group. "To continue doing business on a largely cash basis creates serious safety issues for owners, employees, and customers."

An industry awash in cash
As the legal marijuana industry develops in Colorado and Washington entrepreneurs have run up against a major problem: Banks won't provide them financial services or, for that matter, even accept their deposits, leaving retailers and wholesalers awash in copious amounts cash.
The reason is that marijuana remains an illegal drug under federal law. As a result, banking statutes and regulations make it a crime for financial companies to handle the proceeds of any business engaged in the production, distribution, or sale of the drug. In short, it would be considered money laundering.

While the coordinated guidance issued at the end of last week by the departments of Justice and Treasury doesn't change this, it does send a strong signal to financial institutions that they won't be prosecuted for providing services to the marijuana industry so long as their customers don't run afoul of eight "enforcement priorities" laid out by the Justice Department in the middle of last year.
These include preventing the distribution of marijuana to minors, preventing revenue from the sale of marijuana from going to criminal enterprises, and preventing the interstate trafficking of marijuana, among others. Short of "significant" violations like these, the Justice Department is now instructing its law-enforcement officers to concentrate their "limited investigative and prosecutorial resources" elsewhere.