Marijuana businesses could gain access to banks
Pot remains illegal under federal law, but the Justice Department is reviewing plans that would let the industry bank legally.
Despite a growing acceptance of marijuana in states across the U.S., pot remains illegal under federal law. And until now, few banks have been willing to work with the medical marijuana establishments currently legal in 20 states and the District of Columbia.
Banks "are afraid of losing the FDIC protection and insurance on all of their funding," Kayvan Khalatbari, co-owner of the Denver Relief medical marijuana facility, told MSN moneyNOW last year. Banks that work with marijuana-related groups also face the threat of coming under federal drug racketeering charges.
But those restrictions may soon be changing. On Tuesday, U.S Deputy Attorney General James Cole said the Justice Department and federal banking officials are reviewing plans that would allow financial institutions to open accounts and transact business with professionals in the legal marijuana industry.
According to Reuters, Cole told a Senate Judiciary Committee hearing that not allowing marijuana businesses access to banks forced those businesses to deal mostly in cash, which opens them up to robbery, fraud or money-laundering.
Cole said the Justice Department is reviewing the issue with FinCEN -- the Treasury Department's Financial Crimes Enforcement Network -- and they're "talking with and bringing in bank regulators to discuss ways that this could be dealt with in accordance with the laws that we have on the books today."
The issue has grown more urgent following last year's elections in Colorado and Washington state, where voters decided to allow the legal use of recreational marijuana. Earlier this week, Colorado became the first state in the nation to finalize rules for its recreational marijuana businesses, which is scheduled to start early next year. The laws cover everything from inventory tracking to packaging and advertising.
People in Colorado's marijuana industry say they're ready and very willing to work with the financial institutions. "Writing checks and being able to use ACH (automated clearinghouse) transfers and wire transfers, those are things I yearn for," Elliott Klug, CEO and partner of Pink House, a medical marijuana company with seven retail stores and around 80 employees in Colorado, told MSN moneyNOW.
Klug thinks allowing marijuana businesses access to banks will make his industry more vigilant about following government regulations while providing a model for other potential legal marijuana markets in the U.S.
"We've matured enough that, if we can continue this maturity process, the federal government signaled they're willing to work with us," he said, "so it's exciting."
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