Updated 3:42 p.m. EST
WASHINGTON, D.C. - The federal government took a step Friday toward normalizing marijuana sales in states where the drug is legal, announcing new guidance that would allow banks to “provide services to marijuana related businesses.”
The move, announced by Financial Crimes Enforcement Network (FinCEN), which is a part of the U.S. Treasury, will “promote greater financial transparency in the marijuana industry and mitigate the dangers associated with conducting an all-cash business.”
Voters in Colorado and Washington State legalized marijuana for recreational purposes last year, but because of concern about federal banking laws, many financial institutions have declined to do business with the growing industry. The memo, which serves as an official acknowledgement of the legitimacy of marijuana retailers by an agency that investigates financial crimes, may help increase the availability of banking options for marijuana business owners.
The FinCEN memo encourages banks to verify and review a potential client's license to operate, engage in "ongoing monitoring of publicly available sources for adverse information about the business and related activities," and offers examples of "red flags" that the business may be involved in illegal activity.
The Department of Justice issued a separate memo to all U.S. Attorneys clarifying the department's "enforcement priorities" regarding marijuana. The list of eight priorities includes "preventing the distribution of marijuana to minors," "preventing violence and the use of firearms in the cultivation and distribution of marijuana," and "preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels."
But judging by today's statement from Frank Keating, the president and CEO of the American Bankers Association, the new guidance is no panacea.“While we appreciate the efforts by the Department of Justice and FinCEN, guidance or regulation doesn’t alter the underlying challenge for banks," stated Keating. "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.”