On Friday, February 14, 2014, the Obama administration said that it would allow the banking industry to finance and do business with legal marijuana distributors. Legal distributors will now be allowed to open savings accounts, checking accounts, and secure loans with banks.
The sale of marijuana for medicinal purposes is legal in 18 states, including the District of Columbia. Furthermore, Washington State and Colorado allow the sale of marijuana for recreational purposes.
Federal Law still classifies marijuana as a the most dangerous type of drug, a schedule I drug – that is, the government believes it has no currently accepted medical use, has a high potential for abuse, and the potential for extreme psychological and physical dependence. The government maintains this position despite evidence to the contrary. The government, therefore, places marijuana in the same class as heroin.
Just to be clear, the Administration has not legalized marijuana, or even decided that state law preempts federal law in the area of marijuana laws. It has simply decided not to enforce federal law. The administration has indicated that it will not seek to prosecute these states as long as they adhere to strict guidelines – for example, not selling to minors.
The Treasury Department has issued new rules for banks to follow if they decide to do business with medical dispensaries. In August, the Justice Department directed its attorneys to not prosecute banks doing business with marijuana dispensaries, as long as they followed the guidelines issued in August.
In the past, financial institutions feared prosecution for money laundering – accepting money from an activity, marijuana, that the federal government considered illegal. Medical marijuana businesses have been an all cash business, which means they run the risk of being robbed. The administration hopes this change in policy will assuage that concern.
This policy does not address all concerns, however. For example, it is unclear how this policy will be affected if a new administration decides to prosecute state licensed business for violating federal laws. And what impact this will have on the financial institutions that have worked with these businesses.
If you are looking to get involved in the medical marijuana business, contact Kern Law, APC today. I can help navigate the complexities the federal and state laws that apply.