Washington: The Obama administration on Friday sought to lessen the fear of prosecution for banks doing business with licensed marijuana companies, further encouraging US states such as Colorado and Washington that are experimenting with legalizing the drug.The Justice and Treasury departments outlined the policy in writing to federal prosecutors and financial institutions nationwide. The guidance stopped short of promising immunity for banks, but made clear that criminal prosecution for money laundering and other crimes was unlikely if they met a series of conditions, officials said.
The guidance was intended to increase the availability of banking services, such as savings and checking accounts, to marijuana shops that typically deal in cash.
Last month, Colorado became the first state to open retail outlets legally permitted to sell marijuana to adults for recreational purposes, in a system similar to what many states have long had in place for alcohol sales. Washington state is expected to follow Colorado`s lead.
The number of states approving marijuana for medical purposes has also been growing. California was the first in 1996. It has since been followed by about 20 other states and the District of Columbia.
U.S. Attorney General Eric Holder said last month that the administration was planning ways to accommodate marijuana businesses so they would not always be dealing in cash.
"There`s a public safety component to this. Huge amounts of cash, substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited, is something that would worry me just from a law enforcement perspective," Holder said on January 23 at an appearance at the University of Virginia.
The American Bankers Association expressed skepticism that the guidance would make much difference. Marijuana sales still violate federal law, so banks are still at risk, said Rob Rowe, a lawyer with the trade group.
"Compliance by a bank will still require extensive resources to monitor any of these businesses, and it`s unlikely the benefits would exceed the costs," Rowe said in an email to Reuters. "While we greatly appreciate the efforts by the Department of Justice and FinCEN, guidance or regulation doesn`t alter the underlying challenge for banks."
First Published: Saturday, February 15, 2014, 04:33