This afternoon, the Obama administration delighted marijuana advocates by announcing new guidelines meant to make it easier for cannabis businesses to open bank accounts in states where the drug is legalized.
Whether or not those new guidelines will have much of an affect, however, is an open question.
Financial institutions have largely shunned the pot industry, even in weed-friendly locales like Colorado, out of fear of violating federal drug and banking laws. As a result, dispensaries and growers have had to operate on a mostly cash basis, which is not exactly the most safe or efficient way to run a company. They've also been denied access to credit.
The new guidelines, released by the Justice and Treasury Departments, essentially give banks an assurance that, as long as they play by the right rules and file the right paperwork, they probably won't be prosecuted for letting your local pot shop open a checking account. Emphasis on probably. Back in August, the DOJ issued a memo stating that it would only focus on prosecuting marijuana businesses that broke state law or committed certain egregious offenses, like trafficking the drug over state lines or selling to minors. The DOJ now says, essentially, that banks are unlikely to be prosecuted so long as they only deal with marijuana customers that stay within those bounds.
Meanwhile, any financial institution that chooses to offer its services to cannabis businesses will have to file paperwork stating that they believe the customer is operating on the up and up.
“This is a huge victory for our members, our communities, and the banks that take this opportunity to serve a thriving new market,” Aaron Smith, executive director of the National Cannabis Industry Association, a marijuana lobbying group, said in a statement blasted out to reporters.
Without question, this does mark a huge step forward for the industry. But one has to wonder how many banks will be interested in creating a paper trail registering all of their marijuana-related dealings. The Justice Department's memo doesn't provide immunity from prosecution. That might be fine so long as marijuana-tolerant Democrats control federal law enforcement. But what happens the next time a Republican wins office?
A senior Treasury official told the Seattle Times that the guidelines probably wouldn't ease the concerns of large banks, and that the government expected mostly small and medium sized-banks to start offering their services to marijuana businesses.
We'll see how many of those community banks jump at the opportunity. In the meantime, the law around marijuana is still grayer than a puff of smoke.