Treasury Secretary Jacob J. Lew, who oversees the world's reserve currency and the largest bond market, was roped into a debate today about a new magnet for money: legalized marijuana.
Lew, testifying today before a House Appropriations subcommittee in a hearing, was asked by two lawmakers about Treasury guidelines allowing banks to offer services to marijuana dealers in states that have legalized pot for recreational or medical use.
The Treasury wants to ensure legal pot stores use the traditional banking system, where regulators can scrutinize questionable transactions, Lew explained. Otherwise, the money would be difficult to monitor.
"The risk of cash transactions is actually something that we were quite concerned about," Lew said in response to a query from the committee chairman, Kentucky Republican Harold Rogers.
"Without any guidance, there would be a proliferation of cash-only businesses, and that would make it impossible to see when there are actions going on that violate both federal and state law, and that would be a real concern," Lew said.
The Treasury's Financial Crimes Enforcement Network issued guidelines Feb. 14 allowing U.S. banks to offer accounts and other services to businesses in states where medical or recreational marijuana sales are legal.
Lew was asked by Mario Diaz-Balart, a Florida Republican, if the guidelines will have a "very clear statement" that marijuana is illegal under federal law. Lew responded that "our guidelines in no way change federal law."
The guidance was sought by pot businesses and the governors of Colorado and Washington, whose voters in 2012 approved the first sales of marijuana for recreation.
"We thought that the clarity, bringing it into daylight, was a better solution," Lew said. "The real clarity here would require legislation that conformed to policy. But, since we don't have that, it was an attempt to have as much clarity as one can have given the complex situation with the state laws."
In his exchange with Lew, Rogers asked whether cocaine dealers should be "given the same break" as the marijuana businesses.
"I'm not aware of any state that has legalized, you know, activity in that area," Lew said.