"DOJ Plans To Take On Pot Banking Next"
The Department of Justice’s announcement that it will scale back marijuana prosecutions in states with their own laws — at least in theory — and let state recreational marijuana laws go into effect has answered two of the biggest outstanding questions as Washington and Colorado move toward implementing their state regulatory schemes for marijuana. But it leaves open other major questions that persist in a regime that is legal at the state level, but not at the federal level.
One of the most pressing is whether the Justice Department will prosecute financial institutions for doing business with marijuana operators. In the past, banks have declined to allow bank accounts or credit cards, or loans for those associated with medical marijuana dispensaries. At the Senate Judiciary Committee hearing Tuesday on implementation of these state laws, Deputy Attorney General James Cole said the Department of Justice would develop a policy on this issue, recognizing the dangers posed by an industry without access to banks:
As far as the banking issue is concerned, we agree it is an issue that we need to deal with. When the Attorney General talked to the governors of Washington and Colorado they raised the same issue. And others have raised the same issue. Obviously there is a public safety concern when businesses have a lot of cash sitting around. There’s a tendency that there’s guns associated with that so it’s important to deal with that kind of issue. And we are at the present time talking with FinCEN and they are talking and bringing in bank regulators to discuss ways that this could be dealt with in accordance with the laws that we have on the books today.
Last week, an anonymous DOJ official suggested the Justice Department was unlikely to prosecute banks for marijuana accounts, according to a report by the Huffington Post. As that report pointed out, whatever the DOJ’s policy on banks, it will likely have more control over enforcing it than they do over dispensary prosecutions, since those are conducted at headquarters, while each U.S. attorney retains discretion in interpreting the policy on prosecuting dispensaries and growers.
Another major obstacle for marijuana businesses is that they cannot deduct business expenses under the federal tax code. Cole said Tuesday resolving that issue would be up to Congress.
Bills pending in Congress would resolve both of these issues, and other bills would exempt states with their own marijuana laws from federal prohibition, and even create a federal regulatory scheme. But senators questioning Cole Tuesday nonetheless pressured Cole to take these issues on and to implement even clearer metrics and guidelines for who will be targeted, likely recognizing that passage of any law in Congress is a long way off at the very least.