Colorado Springs News, Sports & Business

Marijuana industry will soon have access to financial institutions

The Associated Press - Updated: September 10, 2013 at 10:17 pm 0

WASHINGTON - The Justice Department and federal banking regulators will help clear the way for financial institutions to transact business with the legitimate marijuana industry without fear of prosecution, Deputy Attorney General James Cole told Congress on Tuesday.

The issue has taken on greater urgency now that Colorado and Washington have become the first states to legalize recreational use of marijuana.

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 problem occurs in states that have laws permitting medical use of marijuana.

In an appearance before the Senate Judiciary Committee, Cole said the absence of banking services is one that "we need to deal with" and that "we're working on it."

The congressional hearing was the first since the administration announced a new, more permissive enforcement policy. On Aug. 29, the Justice Department said it won't try to stop Colorado and Washington state from legalizing recreational marijuana use as long as they implement strong enforcement systems.

Committee Chairman Patrick Leahy, D-Vt., said that as a result of the banking constraints, legitimate marijuana businesses are operating on a cash-only basis and "that's a prescription for problems, tax evasion" and other criminal activity. Cole agreed and said there is a public safety component to the problem because the cash-only business can result in the presence of guns.

In 2011, American Express announced it would no longer handle medical marijuana-related transactions because of fear of federal prosecution. A month later, Cole gave banks an explicit directive on medical marijuana that stated: "Those who engage in transactions involving the proceeds of such activity may also be in violation of federal money laundering statutes and other federal financing laws."

Leahy said the Justice Department should focus on prosecuting violent crime and should respect the votes in Colorado and Washington to legalize small amounts of marijuana for personal and medical use.

Iowa Sen. Chuck Grassley, the committee's top Republican, said the Justice Department is "giving the green light" to an industry bent on breaking federal law.

Grassley said that Colorado has seen a sharp uptick in diversion of marijuana from Colorado to other states and increased use among minors.

Comment Policy
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
AUG
2
AUG
3
AUG
4
AUG
5
AUG
6
AUG
7
AUG
8
AUG
9
AUG
10
AUG
11
AUG
12
AUG
13
AUG
14
AUG
15
Advertisement