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DOJ memo hopes to offer financial firms more explicit guidelines on handling marijuana lucre

Banks concerned guidelines are not explicit enough to protect them from investigation

Marijuana was officially legalized for recreational use in Colorado as of Jan. 1 2014, but being that it’s still currently illegal both federally and in the 49 remaining states, the flow of funds associated with the sale of weed could cause headaches for financial institutions. Fortunately, the Department of Justice (DOJ) is expected to offer guidelines to financial institutions in a memo that the Wall Street Journal reports should be coming any day. But banks remain nervous that the guidelines do not go far enough to protect them.

Under current federal law, any bank institution caught accepting deposits from known drug dealers would be in violation of money-laundering laws. Deposits that are suspect require the bank involved to fill out suspicious activity reports. Financial firms are concerned that similar regulations could be used to charge them when dealing with Colorado-based marijuana sales.

The memo hopes to clarify the responsibilities of banks and financial firms in Colorado. Those close to the draft say that it emphasizes that federal enforcement will first go after marijuana sellers who use  legitimate sale in Colorado as a front for other illegal activity, funneling it across state lines, or as part of a larger criminal drug empire, for example. The memo is expected to run parallel to another document that the DOJ released in 2013, in which it laid out eight prosecution priorities it would maintain as weed laws loosen across the United States.

Those priorities were preventing the sale of pot to minors, preventing marijuana sale profits from funding criminal enterprises or gangs, preventing diversion of marijuana to states where it is still illegal under state law, preventing retail marijuana sales from being used as a cover for other crimes, preventing gun violence in the marijuana business, preventing drugged driving, preventing the growth of marijuana plants on public lands and preventing pot possession or use on federal property.

But given that banks do not have a firsthand account into the activity of each dealer in Colorado, there is no way for them to vet many of those stipulations. Without additional guidelinesm the memo currently pending is likely to draw additional fire from banks.


For more on the US’s relaxing attitudes on marijuana check out these articles:

Marijuana prices skyrocket in Colorado with recreational purchase legalization

California Supreme Court upholds local medical marijuana bans

Texas lawmakers approve drug tests for unemployment applicants

Executive Editor

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Chris DiMarco

Chris DiMarco, Executive Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content...

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