U.S. Offers Cannabis Guidance to Banks
Ryan Allway
February 18th, 2014
Policy, Top Story
Cannabis remains a Schedule I drug under the U.S. Controlled Substances Act which means it’s among the most tightly restricted drugs. Since the sale of cannabis is federally illegal, commercial banks have largely stayed away from the industry. Accepting the proceeds from an illegal activity could expose these banks to money laundering and racketeering charges.
Attorney General Eric Holder first addressed this issue by noting that dispensaries carrying large amounts of cash are at greater risk of crime. With adult use cannabis now legal in Colorado and Washington, marijuana sales are quickly racking up into the billions of dollars with nowhere to go. The risk is widely seen as escalating the longer the embargo goes on.
On February 14, 2014, the U.S. Department of Justice and U.S. Treasury Department issued joint memos that provide banks with guidelines for dealing with the cannabis industry. Under the new rules, banks must verify that the marijuana retailers are properly licensed by the state before pursuing a business relationship and report suspicious activity to regulators.
Many experts believe that the moves will encourage larger commercial banks to begin entering the industry, but smaller regional banks may stay away for fear of fines. Others insist that nothing short of Congressional action will spur banks to consider dealing with the industry given the many possibilities for wrongdoing and lack of crystal clear rules.
“We don’t see that guidance as giving banks a full green light to bank these businesses,” said Amanda Averch, Director of Communications at the Colorado Bankers Association, in an interview with KPBJ.com. “We feel the only real and lasting solution is an Act of Congress.”
The U.S.’s move to open up banking to the industry is designed to move transactions from the shadows and into the traceable limelight. Transactions made through the banking system are easier to track for taxation purposes and more easily available to a wider group of people. As a result, the new rules and legislation could prove to be a dramatic boost to everyone.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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