US banks can accept legal marijuana money – if you believe?

The Obama administration has 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 legalising 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…

Currently, processing money from marijuana sales puts federally insured banks at risk of drug racketeering charges, and they therefore refuse to open accounts for marijuana-related businesses, the AP news agency reported.

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. Forced to deal in cash because of federal policy…

US 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…

The American Bankers Association expressed scepticism 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,”…

I asked my favorite banker about this – and received the same answer given by Rowe. As long as the Feds base their practices on existing law, there’s no one willing to be the test case after being arrested for violating federal banking regulations. Even if the DOJ says go ahead – we won’t bust you.

Why should a bank trust pronouncements from a political body unwilling or unable to change their own regulations?

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