DENVER, CO - JANUARY 1: Sam Walsh, a budtender, sets up marijuana products as the 3-D Denver Discrete Dispensary prepares to open for retail sales on January 1, 2014 in Denver, Colorado. Legalization of recreational marijuana sales in the state went into effect at 8am this morning. (Photo by Theo Stroomer/Getty Images)
KUSA - The federal government responded on Friday to the most important issue confronting Colorado's newly legal marijuana industry: Difficulty getting bank accounts.
LEARN MORE ABOUT LEGALIZED MARIJUANA IN COLORADO
The justice department and US treasury published a pair of memos aimed at easing concerns that banks have in doing business with marijuana companies.
Banks are regulated by the federal government, and federal law still bans the use and sale of marijuana. Banks fear punishment from regulators or even prosecution for racketeering if they do business with the pot industry.
Some marijuana growers and retailers have worked around this by quietly establishing bank accounts under company names that don't overtly indicate they are in the marijuana trade. Others have chosen to do all their business in cash, even hauling bags of money to make tax payments to the state, which they argue is dangerous.
"I hope today's guidance prompts some in the financial industry to begin providing basic financial services to these Colorado small businesses," said Rep. Ed Perlmutter (D-Colorado.) "Solving the banking component is one of the last hurdles of having a robust and safe regulatory regime here in Colorado."
The new memos are drafted to compliment a set of priorities for federal law enforcement, listed in the so-called "Cole memo."
That document was meant to focus agents and prosecutors on cases that violate a set of guidelines that include cartel involvement, selling to minors, and moving marijuana across state borders.
A press release from the Financial Crimes Enforcement Network (FinCEN,) part of the US Treasury Department, stated: "the guidance provides that financial institutions can provide services to marijuana-related businesses in a manner consistent with their obligations to know their customers and to report possible criminal activity."
FinCEN is the agency in charge of writing rules to prevent money laundering in the financial sector.
The guidance instructs banks to verify that marijuana companies are properly licensed by the state, and to monitor for and report suspicious activity.
Banks will still have to file "suspicious activity" reports when dealing with legal marijuana businesses, but the federal government will take a special "marijuana limited" report in cases that do not involve bad business practices or criminal activity beyond dealing in regulated marijuana.
"We're grateful to officials at the Treasury and Justice Departments who have been working to resolve this banking crisis," NCIA executive director Aaron Smith said. "No legitimate business should be forced to manage its payroll, taxes, utility bills, and licensing fees entirely in cash.Today's guidance allowing for banking access means better security for our members, easier accounting and transparency, and more resources to invest in our local economies."
Despite the new guidance from Treasury and DOJ, banks still have concerns because federal regulators can still impose fines on banks who deal with the industry.
The Colorado Bankers Association put out a statement Friday. The organization said the new guidelines are a "red light."
"In fact, it is even stronger than original guidance issued by the Department of Justice and the Treasury," said Don Childears, president and CEO of the Colorado Bankers Association. "After a series of red lights, we expected this guidance to be a yellow one. This isn't close to that. At best, this amounts to 'serve these customers at your own risk' and it emphasizes all of the risks. This light is red."
Perlmutter is sponsoring a bill that would give banks more ironclad assurance that they can do business with the marijuana industry without exposing themselves to undue risk.
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