WASHINGTON -- The Justice Department and federal regulators will help clear the way for credit unions and banks to transact business with the legitimate marijuana industry without fear of prosecution, Deputy Attorney General James Cole told Congress yesterday.
The issue has taken on an urgency now that Colorado and Washington have become the first states to legalize recreational use of marijuana and as many as 19 states have authorized marijuana dispensaries for medicinal purposes.
The Justice Department is reviewing the issue with the Treasury Department's Financial Crimes Enforcement Network (FinCEN), which targets money-laundering, according to Cole.
Credit unions and banks doing business with legal pot dispensaries have been caught in legal limbo fighting civil forfeiture orders on deposits and threats of prosecution because federal law still bars marijuana use. As a result, under anti-money-laundering rules, credit unions and
The Deputy Attorney General said yesterday in an appearance before the Senate Judiciary Committee, the absence of financial services is one that "we need to deal with" and that "we're working on it."
The Justice Department’s efforts come as House members from Colorado and Washington have introduced legislation to ease federal banking restrictions on legal marijuana businesses. The co-sponsors called on NCUA and banking regulators last week to issue their own rules easing the restrictions, absent passage of their bill.
Earlier this week Colorado became the first state to finalize rules for recreational marijuana businesses, which are expected to begin at the beginning of next year. The rules released Monday by the Colorado Department of Revenue cover everything from pot shop licensing to inventory tracking to marijuana packaging and advertising.
Sen. Patrick Leahy, D-Vt., chairman of the Judiciary Committee, said 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 and the Justice Department gave credit unions and 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."
Sen. 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.
