Banks relieved over new federal stance on pot business

By Jerry Cornfield
The (Everett) Daily Herald

Attorney General Eric Holder’s willingness to allow banks to deal with marijuana businesses is welcome news for state leaders, entrepreneurs and bankers worried by the prospect of conducting all transactions in cash.

And they want the Obama Administration’s top law enforcement official to roll out his promised rules before the legal growing and selling of pot begins across Washington.

“It’s a positive sign,” Denny Eliason, lobbyist for the Washington Bankers Association, said Friday, Jan. 24. “We are very hopeful that the guidance from the Justice and the Treasury departments and other regulators will be substantive. What we understand is it should come sooner than later.”

Marijuana businesses, even ones that will soon be licensed in this state, are considered criminal enterprises under federal law, which makes handling their money a crime in the eyes of the Department of Justice.

As long as financial institutions fear prosecution, owners of marijuana businesses will be hard-pressed to open a bank account, secure a line of credit, obtain a loan or allow the use of debit and charge cards for purchases.

It’s an urgent concern in Washington and Colorado, the first states to legalize recreational use of marijuana. Colorado’s retail sales began this month.

Gov. Jay Inslee and Colorado Gov. John Hickenlooper urged Holder last year to intercede. They told him it’s not farfetched to imagine store owners paying taxes with suitcases of money and keeping large sums of cash in safes, making themselves inviting targets for criminals.

Holder, whose underlings have worked on the issue for months, endorsed changes for the first time publicly on Thursday, Jan. 23. In an appearance at the University of Virginia, he said it is important from a law enforcement perspective to enable places that sell marijuana to have access to the banking system so they won’t have large amounts of cash lying around.

“This is one of the most important unanswered questions we’ve been grappling with,” said Jaime Smith, an Inslee spokeswoman. “We’re looking forward to hearing how the feds think we can move forward in addressing this issue.”

Attorney General Bob Ferguson is keeping close tabs on the process too, though he’s not been in contact with Holder on potential language for any regulations, his staff said.

“The state has been focused for some time on addressing the potential public safety issues created by current federal banking regulations,” Ferguson spokeswoman Janelle Guthrie wrote in an email. “We are encouraged by AG Holder’s comments (Thursday, Jan. 23) and we look forward to seeing additional details when they are released.”

Washington lawmakers called Holder’s comments a big deal because new federal rules will enable marijuana businesses to be integrated into the state’s commerce system.

“It’s a good decision,” said Rep. Mary Helen Roberts, D-Lynnwood. “It helps treat them as just another business. It will help normalize things.”

Holder did not indicate when the regulations would come out. Attempts to get clarification from the Department of Justice on Friday were unsuccessful.

Eliason said banks will be able to offer services pretty quickly once they are known.

The Washington State Liquor Control Board is doing “really good work” in evaluating the backgrounds of those seeking licenses to get into the marijuana business, he said. That will help financial institutions know who they can do business with, he said.

“It won’t take long,” he said. “Our industry is just waiting for words on paper.”

Jerry Cornfield is a staff writer for The Daily Herald in Everett, Wash., a partner publication of The Bellingham Business Journal. 

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