Attorney General Eric Holder said Thursday the Obama administration plans new rules that would allow banks to do business with firms that sell marijuana legally, an announcement that brought cheers from the industry and Colorado Gov. John Hickenlooper, but a more cautious response from bankers.
"Everyone in the industry is thrilled with this information. The sooner it happens the better," said Judy Negley, co-owner of two Indispensary medical marijuana dispensaries in Colorado Springs. "We have been an all-cash business for a long time, and it has been a challenge not having banking services and those tools available to us."
According to a report in the New York Times, Holder said the government would soon offer rules to help marijuana businesses access the U.S. banking system. But it's unknown how far the rules will go toward opening up full banking services to the marijuana industry; the Times story said the rules would primarily tell prosecutors not to prioritize cases involving legal marijuana businesses that use banks.
Still, the announcement indicates the Obama administration acknowledges that marijuana has become a legal industry in some states, and people in the business face safety issues by having to operate primarily on a cash-only basis.
Indispensary has been able to find a credit card processor for its transactions "on a fairly consistent basis," but has been forced to use money orders to make city sales tax and employee tax withholding payments because the business could not get a checking account, line of credit or other business banking services, Negley said.
"Running a cash business is something I had to learn to do," Negley said. "It is a high-anxiety business and this just adds to it, especially with all of the media reports about how much cash we supposedly have on hand. I don't think we have any more cash on hand than any other active retail business.
"Being able to do an EFT (electronic funds transfer) transaction or get a credit card in our own name so we are not kept in the shadows is really important to us," Negley said.
Robin Roberts, president of Pikes Peak National Bank, had heard from industry contacts for weeks that new rules were coming, and she expects the change to be in place soon. Banks will be expected to extensively vet any legal marijuana business it accepts as a customer, get a legal opinion from the bank's lawyer and assess the risk that the business poses to the bank before opening any accounts, she said.
"When we get guidance from our regulator, we will look at the amount of work required and see if it makes sense," Roberts said. "We would like to do business (with medical marijuana dispensaries) because they are legal businesses and it is safer for them to do so. Every bank will have to make that decision."
Don Childears, president and CEO of the Colorado Bankers Association, an industry trade group based in Denver, said in a statement emailed Friday that Holder's comments were at best "'a proceed with caution' yellow light."
He said the group doesn't "anticipate that bank regulators are prepared to tell banks they can ignore federal drug law" and that any regulatory guidance "won't protect a bank from enforcement actions by bank regulatory agencies."
The statement said providing banking services to marijuana dispensaries "is not a big business opportunity for banks, so resolving this is not something that will benefit banks." But he noted that state regulators could more easily track money from such businesses if they had bank accounts. Marijuana businesses and their customers also would benefit from having access to bank services "who deserve to conduct their legal affairs in a normal fashion," the statement continued.
Colorado Gov. John Hickenlooper said Holder's comments are "welcome," according to a statement issued by his office and reported by the Associated Press. Spokesman Eric Brown said state officials hope the guidance is specific.
Currently, processing money from marijuana sales puts federally insured banks at risk of drug racketeering charges. Because of the threat of criminal prosecution, financial institutions often refuse to let marijuana-related businesses open accounts.
The Associated Press contributed to this report.