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Feds Release Banking Guidance for Marijuana Industry
The federal government on Friday cleared the way for banks to work with marijuana businesses, removing a major hurdle that has tripped up the cannabis industry in recent years.
The US Justice Department and Treasury Department issued joint memos that provide banks with an outline for how to work with the marijuana industry. Under the rules, banks must verify that marijuana companies are properly licensed by the statebefore pursuing a business relationship.
Banks must then monitor these businesses for any financial wrongdoing and report suspicious activity to regulators.
Whether the guidance persuades banks to start working with the cannabis industry is yet to be seen.
Lance Ott, CEO of Guardian Data Systems, a payment processing company, said he believes the guidance could allow larger commercial banks to enter the industry. Smaller regional banks, Ott said, will probably still stay away due to the fear of fines from regulators.
“The banks that can afford to be fined will move forward, because they have less fear of federal prosecution,” Ott said. “Unless federal law changes, [smaller banks] still need more confirmation and more concrete rules.”
Specifically, Ott believes that the rule change could open the door for the Bank of American to begin working in Washington State’s recreational industry, and Wells Fargo bank to work with Colorado’s marijuana businesses.
The new rules create two new banking reports that are focused at marijuana companies. A bank that begins working with a reputable marijuana company must fill out a “marijuana limited” report, which identifies the business relationship.
If the bank suspects wrongdoing, it must fill out a “marijuana priority” report.
The rules are intended to help cannabis transactions to “move from the shadows,” said Jennifer Shasky Calvery, director of Treasury’s Financial Crimes Enforcement Network.
Source: http://truthisscary.com/2014/02/feds-release-banking-guidance-for-marijuana-industry/
