ST. LOUIS, Nov 8 (Thomson Reuters Accelus) - Colorado and
Washington may have voted to legalize recreational marijuana,
but it is far from a green light for banks to provide accounts
or other services to the pot industry in those states.
Financial institutions across the country still face legal
risks if they do business with marijuana shops because pot
remains illegal under federal law.
"If financial institutions are federally licensed or
insured, they must comply with federal regulations, and those
regulations are clear about conducting financial transactions
with money generated by the sale of narcotics," said Jim
Dowling, a former Internal Revenue Service special agent who
also acted as an anti-money laundering advisor to the Office of
National Drug Control Policy.
The ballot measures on Tuesday made Colorado and Washington
the first states to permit recreational marijuana sale and use.
Medical-marijuana laws have been around in some states for more
than a decade.
California was the first state to legalize medical marijuana
in 1996. With the addition of Massachusetts, which passed a
medical-marijuana ballot initiative on Tuesday, 18 states and
the District of Columbia now have such laws on their books.
The medical marijuana business was worth $1.7 billion in
2011 and growing, according to a study by financial-analysis
firm See Change Strategy.
The federal government does not recognize states' authority
to legalize marijuana under any circumstances, however. It has
targeted some medical-pot businesses for violations of the
40-year-old Controlled Substances Act, which classifies the drug
a Schedule 1 narcotic, meaning it is considered addictive and
with no medical value.
The Justice Department on Wednesday said its marijuana
enforcement policies remained unchanged. "We are reviewing the
ballot initiatives and have no additional comment at this time,"
its public statement said.
A Justice Department spokeswoman did not respond to a
request for additional comment related to banking activity.
DEA WARNS BANKS
Under President Barack Obama, federal authorities have
focused enforcement efforts on large commercial medical
marijuana operations that generate a lot of money. In some
cases, federal money-laundering and forfeiture laws have been
used against such businesses.
The U.S. Drug Enforcement Administration (DEA) began warning
banks and credit card companies away from medical marijuana
businesses four years ago, and many, if not all, have responded
by closing the businesses' accounts. Even small regional banks
that once publicly embraced the industry have abandoned it.
Some medical marijuana businesses pose as traditional
medical clinics to open bank accounts, or clandestinely misuse
existing personal or business accounts.
U.S. attorneys offices in states with medical marijuana laws
have had a large degree of autonomy in determining when to bring
criminal prosecutions for marijuana-related infractions of the
Controlled Substances Act.
In 2010, Californians considered legalizing the recreational
use of marijuana. While the measure ultimately failed, prior to
the vote U.S. Attorney General Eric Holder vowed to aggressively
prosecute "organizations that possess, manufacture or distribute
marijuana for recreational use".
After Tuesday's votes, the Justice Department and individual
U.S. attorneys offices will have to clarify their intentions
with regard to enforcing the federal marijuana ban in Colorado
and Washington, former federal enforcement officials said.
The recreational marijuana measures in both states will
allow pot to be sold at state-licensed stores.
However, former Justice Department officials said that
financial institutions, even those in Colorado and Washington
State risk possible criminal or civil penalties for doing
business with pot shops.
Once the states have begun their licensing processes,
financial institutions may need to update their reviews on
existing business customers by ensuring they are not on lists of
state-licensed marijuana stores, the sources said.
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