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Legal marijuana businesses seek banking solutions

January 26, 2014 at 8:45 PM EST
Attorney General Eric Holder said Thursday the administration will soon roll out regulations to allow banks to do business with legal marijuana sellers. How will the Department of Justice’s decision impact owners of legal marijuana stores and dispensaries?
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HARI SREENIVASAN: We thought we would spend some time tonight talking about whether legal marijuana businesses should have access to the nation’s banks. It is a topic that Attorney General, Eric Holder, raised a few days ago. For more we are joined tonight by Alex Altman of Time Magazine. So, what did the Department of Justice come out and say?

 ALEX ALTMAN: Well, Attorney General, Eric Holder, has said at some point very soon the department will be issuing guidelines that will hopefully ease some of the questions that banks have in regards to being able to transact with legal marijuana companies, both in Colorado, which on January 1st became the first state in the world to create a legal recreational market for marijuana, as well as the twenty other states – plus the District of Columbia – that permit medical marijuana.

HARI SREENIVASAN: So, right now all these businesses all over the country are dealing solely with cash, which means that – what, they store it in a warehouse somewhere?

ALEX ALTMAN: Solely or mostly in cash, which means, you know, you have a lot of legal companies, who are forced to resort to the type of shadowy capers that you might find in a gangster movie. I mean, you know, I have talked to owners in Denver, dispensaries who lease secret, off-site warehouses to store their cash, who carry around tens of thousands of dollars on their person pretty much every single day, who are forced to foot tens of thousands of dollars tax bills in stacks of twenties. So, it is a situation for them that presents challenges that are both difficult in terms of cash management, and dangerous in terms of personal safety.

HARI SREENIVASAN: And so why can’t they just take it to a bank? What is the bank going to get in trouble for?

ALEX ALTMAN: Well, because marijuana is still a so-called Schedule 1 drug on par with drugs, such as cocaine or ecstasy, banks that transact with legal marijuana businesses are still at risk of running afoul of federal money laundering statutes, so they could surrender their charter, or even in the event of DOJ guidelines, they could be at risk of prosecution by some sort of zealous law enforcement. It is sort of a yellow light rather than carte blanche to do these sorts of transactions.

HARI SREENIVASAN: Right. So, what about state banks in a state that legalized it? Lets say, for example, Colorado, couldn’t a state bank be completely within the law to take that money?

ALEX ALTMAN: It is possible. Some of the industry out there has been scheming for a solution to this problem, and they have discussed everything from state chartered banks, as you mentioned, even to the digital currency, Bitcoin. But, you know, they have sort of – they believe that unless this is a situation that is solved at the national level, it is, because banks are risk averse – it will be problematic for banks to transact.

HARI SREENIVASAN: All right. Alex Altman of Time Magazine joining us from Washington. Thanks so much.

ALEX ALTMAN: Thank you.