Treasury releases rules for banking with marijuana money

Regulations mirror the DOJs sentiment prioritize “suspicious” activity related to marijuana sale

One of the major impediments to the legitimization of recreational marijuana in the United States has been the prohibitive and often incomplete laws governing how to handle the money it produces. But the Obama administration has given the banking industry a more explicit path to handling the money generated by the industry, unveiling a framework on Feb 16 that more clearly defines how banks should interact with the marijuana industry.

The rules (PDF), which were released by the Financial Crimes Enforcement Network (FinCEN) arm off the Department of Treasury (DOT), closely echo the sentiments that the Department of Justice (DOJ) released in 2013. The rules canonize the stipulations released by the DOJ in the Cole Memo, with priorities designed to stop illicit activities related to marijuana sale. Among the priorities are keeping marijuana out of the hands of minors, preventing its growth and sale from supporting the distribution of other drugs, stopping pot users from driving while under the influence, and banning violence as it relates to the sale of pot.

“Now that some states have elected to legalize and regulate the marijuana trade, FinCEN seeks to move from the shadows the historically covert financial operations of marijuana businesses,” noted FinCEN Director Jennifer Shasky Calvery in a statement released with the guidelines. “Our guidance provides financial institutions with clarity on what they must do if they are going to provide financial services to marijuana businesses and what reporting will assist law enforcement.”

While financial institutions are authorized to engage in banking activity with legitimate marijuana businesses that follow those rules, they are obligated to report any suspicious activity through the proper channels.  Failure to do so can result in fines and disciplinary action from the DOT.

The move not only makes it easier for pot-purveyors to funnel their profits into the financial system, but could also offer an opportunity for investors to become more involved in the funding of marijuana-related businesses.

But even with these new rules in place, the fact remains that marijuana is still a federally prohibited substance, and while banks may be able to remain compliant at the state level federal involvement-- despite continued promises to the contrary--is still a possibility. Until more holistic federal overhauls of marijuana law are considered, many banks may continue to view marijuana money too risky to handle.


For more on business and compliance in marijuana law, check out these stories:

AG Eric Holder says legal marijuana businesses should have bank access

Marijuana an increasingly attractive investment opportunity despite unclear financial regulations

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

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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