DENVER | Attorney General Eric H. Holder Jr.’s promise to issue rules making it easier for banks to do business with legal marijuana sellers is being viewed in Colorado with cautious optimism, with an emphasis on the caution.
Having to conduct transactions in cash has been a huge drawback for Colorado’s nascent retail marijuana shops, which launched Jan. 1, but it may take more than a Justice Department guidance to solve the problem.
“At best, Holder’s statement is a ‘proceed with caution’ yellow light,” Don Childears, president and CEO of the Colorado Bankers Association, said in a statement. “While we are encouraged that the attorney general has stressed cessation of prosecution, we don’t anticipate that bank regulators are prepared to tell banks they can ignore federal drug law. Two of those bank regulators are outside the executive branch and won’t necessarily follow the AG’s view.”
Mr. Holder said in remarks late last week at the University of Virginia that he would release “very soon” a guidance to federal prosecutors and law enforcement giving wiggle room to banks that provide business accounts to marijuana clients in violation of federal banking laws.
“You don’t want just huge amounts of cash in these places. They want to be able to use the banking system,” said Mr. Holder. “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.”
He’s not the only one worried. In Colorado, retail pot sellers have expressed worries about becoming juicy targets for thieves. The state’s 30-plus stores are doing roughly $1 million in combined business per day, resulting in piles of cash but few places to deposit it.
Michael Elliott, executive director of the Marijuana Industry Group in Denver, said he was “encouraged” by Mr. Holder’s statement.
“Everyone recognizes that the banking issue has created serious public safety and accountability problems for this new industry,” Mr. Elliott said in a statement. “We urge Mr. Holder, the Treasury Department and the Obama administration to move quickly to create regulations that allow the legal marijuana industry, its employees, and customers to do business with banks just as any other business sector does.”
That may take more than a go-ahead by Mr. Holder. Mr. Childears said that for Colorado bankers, “the only real solution is literally an act of Congress,” given that offering services for pot shops isn’t viewed by most banks as a “high priority.”
“Some banks might be tempted to take on this business, but we have trouble believing that any bank would risk regulatory problems by doing so without great confidence on a number of fronts, including a low threat of prosecution now and in the future; a high probability there will be no action by bank regulatory agencies on a variety of federal laws; internal comprehensive compliance regimens to comply with applicable law and several other factors,” said Mr. Childears. “We don’t see that happening.”
The banking law disconnect isn’t confined to Colorado. In June, Washington is expected to launch its retail marijuana market. Both Colorado and Washington voters approved in November 2012 initiatives allowing retail sales of recreational marijuana for adults 21 and over.
Other states are expected to consider similar measures, starting with Alaska, where organizers are moving to place a legalization initiative on the August ballot.