BIG NEWS IS NEW CATALYST FOR WEEDS:
Pot Businesses Allowed to Open Accounts With U.S. Banks
By Alison Vekshin Feb 15, 2014 3:41 AM GMT+0700 13 Comments Email Print
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Photographer: Matthew Staver/Bloomberg
The guidelines were sought by marijuana businesses and the governors of Colorado and... Read More
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The U.S. government took a step toward legitimizing the marijuana industry today, allowing U.S. banks to offer accounts and other services to businesses in states where medical or recreational pot sales are legal.
The Treasury’s Financial Crimes Enforcement Network issued guidelines for banks intended to reduce the danger sellers face in operating an all-cash business. The rules would give law enforcement more information about marijuana business activity, the agency said in a news release.
“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,” according to an agency statement.
Marijuana remains an illegal substance under federal law. The guidelines were sought by marijuana businesses and the governors of Colorado and Washington state, whose voters in 2012 approved the sale of marijuana for recreational use. Twenty states also permit medical marijuana.
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Marijuana businesses rallied on the news, with Medbox Inc. (MDBX), which sells automated dispensing systems, soaring as much as 32 percent to $33 before declining to $30 at 3:24 p.m. in New York.
Companies in states that allow and tax marijuana sales have been operating on a cash-only basis, unable to accept credit cards from customers or using business checking accounts to pay expenses or local and state taxes. This made them susceptible to robbery and forced them to pay their taxes in person and in cash.
Banks’ Choice
Financial institutions will be able to decide on their own whether to take on the business, a senior official in the financial crimes unit, who asked not to be identified without authorization to speak publicly, said in a conference call.
The Justice Department released a memo today indicating it wouldn’t pursue enforcement against banks that do business with the marijuana industry if they comply with eight department priorities. These include diverting marijuana from a state where it’s illegal to one where it’s not, and in cases where a marijuana-related business is being used by a criminal organization to conduct financial transactions for its criminal goals, the agency said in a memo from Deputy Attorney General James Cole.
“The department shares the concerns of public officials and law enforcement about the public safety risks associated with businesses that handle significant amounts of cash,” said Allison Price, a Justice Department spokeswoman.
The guidelines “are intended to increase the availability of financial services for marijuana businesses -- that are licensed and regulated -- while at the same time preserving and enhancing important law enforcement tools,” she said.
To contact the reporter on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net
To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net
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