In Pando’s coverage of Colorado’s successful effort to disrupt the drug war, we noted that legal marijuana retail stores are still denied access to basic banking services. That’s because financial institutions are federally regulated and they therefore fear legal consequences if they conduct any business that involves cannabis – a drug that is still outlawed under federal law.
This means the multi-million-dollar legal marijuana industry is a cash-only business, which makes marijuana stores a prime target for robberies and holdups. As evidenced by the private security presence I encountered during my trip to a Denver marijuana store, the industry is well aware of the problem and is trying to take steps on its own to mitigate the crime risk. But the best way to reduce the risk is to let marijuana businesses access the banking system – which is exactly what the Obama administration is now trying to do.
That’s right, just days after President Obama endorsed state efforts to legalize cannabis, the Justice Department announced it is moving to extend banking services to the nascent cannabis industry. The New York Times reports that to justify the move, Attorney General Eric Holder made a public-safety argument:
You don’t want just huge amounts of cash in these places. They want to be able to use the banking system…There’s a public safety component to this. Huge amounts of cash, substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited, is something that would worry me, just from a law enforcement perspective.
It is impossible to know whether Holder’s announcement is a direct result of Obama’s recent pro-legalization comments to The New Yorker, but the timing is certainly fortuitous for drug policy reformers.
Of course, as Politico reports, “a Justice Department spokesman said later that the attorney general was referring to legal ‘guidance’ for prosecutors and federal law enforcement” and that “such a legal memo wouldn’t be enforceable in court.”
Translation: even with the new directives about banking, it will still be possible for individual U.S. attorneys and DEA offices to try to enforce marijuana-related federal laws in places where the drug is legal under state law. That’s not just a hypothetical concern, considering the fact that there have been periodic examples of federal prosecutors and law enforcement agencies ignoring the sprit of drug-enforcement directives from their superiors in the Obama administration.
That said, the guidance the Attorney General is promising will likely deter such prosecutions as they relate specifically to the financial aspects of the pot business. As important, the directive will be another significant step toward legally legitimizing the startup cannabis industry.
[image via thinkstock]