Banks can do business with marijuana sellers in states where use has been legalized either for recreational or medicinal purposes, under a new policy the Obama administration announced Friday.
In a seven-page memo, the Treasury Department said it will not target bank transactions with marijuana businesses in those states as long as the businesses are properly licensed and the banks are taking steps to make sure the businesses don't show signs of gang or cartel-connected activity.
But banks will continue to be required to report on any suspicious activity they see, even in those states where marijuana use has been legalized, the department said.
Pot advocates hailed the changes as a key step in normalizing marijuana businesses.
"It appears that the Obama administration is trying to provide as much protection as possible for the marijuana industry, given the constraints of federal law," said Ethan Nadelmann, executive director of the Drug Policy Alliance.
Pot advocates said some banks had been reluctant to let marijuana businesses open accounts. The advocates said the new policy should take care of that.
But despite Friday's announcement, many financial institutions remain leery of trying to navigate the legal complexities of providing banking services for marijuana-related business.
The Colorado Bankers Association warned its members that the Obama administration's new guidelines only reinforce and reiterate "that banks can be prosecuted for providing accounts to marijuana related businesses."
"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," said CBA president and CEO Don Childears.
While polls show Americans increasingly open to marijuana legalization, and many states are moving in that direction, it remains a thorny issue on Capitol Hill. Decriminalization bills have regularly stalled, never advancing through committee.
That's left President Obama to act on his own.
Last year, after Colorado and Washington state legalization policies took effect, the Justice Department said it would not interfere as long as efforts were made to hinder cartels' involvement and as long as their was no evidence that children were gaining easier access to the drug.
Mr. Obama himself has said in recent interviews that he views alcohol as potentially more dangerous than marijuana, which he has admitted using when he was younger.
Pot advocates, who have long asked the president to take more leadership on the issue, said Friday the latest move was striking.
"I have to say I'm impressed by how the White House is trying to make this work, especially given the inability of Congress to do anything constructive in this area," Mr. Nadelmann said.
Still, some advocates said the president should be even bolder.
"Removing the risks of operating as an 'all-cash' business cannot be overstated, but we will also continue to put pressure on the Obama administration to wrap these types of discrete practices into a more comprehensive medical marijuana policy," said Steph Sherer, executive director of Americans for Safe Access.
• Valerie Richardson contributed to this report.
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