Contrary to being positioned by the mainstream media as a thumbs-up decision for the banking sector, recent guidance by the Department of Justice and the U.S. Treasury does not provide solid legal protection for banks that serve marijuana-related businesses.
Banks should move ahead with extreme conservatism on this issue, because despite the fact that some businesses operate legally in certain states under state law (Colorado and Washington, for example) marijuana possession and distribution violates numerous federal laws.
The guidelines were intended to clarify federal policy. However, banks could be held liable if, even when trying to act responsibly, they are deceived, are perceived as turning a blind eye to illegal activity or make an error. Another major risk for banks is that enforcement priorities could change at any time, especially since political leadership in Washington turns over so often. It remains a very real possibility that banks could be prosecuted, even retroactively, for providing banking services to marijuana-related businesses.
The only true resolution for the banking industry is federal legislation that provides no uncertainty and complete protection. This includes eliminating the possibility of retroactive prosecution of banks for business decisions made before implementation of the legislation. If banks wish to provide services to marijuana-related businesses, they should actively lobby Congress for such a law change. Policy statements, however well meaning, do not provide true legal protection. Only legislation can do that.
Such legislation, H.R. 2652, authored by Rep. Edward Perlmutter, D-Colo., is co-sponsored by 18 other representatives. This legislation is intended to "create protections for depository institutions that provide financial services to marijuana-related businesses." This bill would need banking industry support to pass. Only then would banks and marijuana-related businesses receive the protections necessary to work together.
The practical side of the matter from the perspective of marijuana-related businesses is that these companies are in financial limbo and face significant operational challenges until these banking issues are resolved. At present marijuana businesses are dealing with large amounts of cash and struggling to operate in a safe and effective manner without access to traditional banking services.