Obama Wants Banks to Take Drug Money
The ongoing tension between state and federal law regarding the sale of marijuana has left banks at a loss for what to do.
The ongoing tension between state and federal law regarding the sale of marijuana has left banks at a loss for what to do. While Colorado is bringing in millions of dollars in legal weed sales, banks don't want to touch that money for fear of federal prosecution. That should change soon, as President Obama will announce new guidelines for federal law enforcement and prosecutors so that banks can handle weed money. Attorney General Eric Holder said Thursday during an appearance at the University of Virginia:
You don’t want just huge amounts of cash in these places. They want to be able to use the banking system. 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.
The cash problem is real for both medical and recreational marijuana dispensaries. As Serge F. Kovaleski reported at The New York Times earlier in January, banks' fear has forced dispensaries to deal almost entirely in cash. Proprietors are sick of it. Ryan Kunkel, who co-owns five medical marijuana dispensaries in Washington, told the Times:
Carrying such large amounts of cash is a terrible risk that freaks me out a bit because there is the fear in my mind that the next car pulling up beside me could be the crew that hijacks us. So, we have to play this never-ending shell game of different cars, different routes, different dates and different times.
So banks do need this push from Obama. But as Josh Gerstein at Politico explains, the guidelines or regulations that the president puts forth won't be legally binding: "Such a legal memo wouldn't be enforceable in court and would amount to less than the kind of clear safe harbor many banks say they would want before accepting money from pot businesses." In other words, Obama may say it's okay for banks to take drug money, but banks will still worry that federal law enforcement and prosecutors won't take his advice.
Still, Obama and the DOJ are trying. Holder says he's been working with the Treasury to develop the guidelines.
Holder's announcement comes just a week after Obama declared once and for all that he supports the state-by-state legalization of marijuana. In an interview with The New Yorker, he explained:
Middle-class kids don’t get locked up for smoking pot, and poor kids do … And African-American kids and Latino kids are more likely to be poor and less likely to have the resources and the support to avoid unduly harsh penalties.
And plenty of states are getting on board. New Jersey Gov. Chris Christie announced in his State of the State address last week that he will end blanket incarceration for drug crimes. California, Florida, Oregon, and Alaska are preparing to put weed on the ballot in 2014. Even New York Governor Andrew Cuomo wants to try a pilot program for medical marijuana.
All that will add up to a lot of extra cash lying around.