US encourages banks to do business with licensed pot suppliers with new guidelines
New law enforcement guidelines were issued by the Obama administration on Friday, February 14 intended to urge lenders to do business with pot shops that are licensed by the state even if these businesses are still considered illegal under federal regulations, Reuters reported.
According to administration officials, the policy change intends to address challenges faced by Colorado's newly-licensed recreational marijuana retailers as well as those medical dispensaries operating in other states. Pot shops are limited to cash-only operations since they don't have access to credit or other financial services, the report said.
It still remains to be seen, however, if lenders will be assured enough with the new guidelines. The Justice and Treasury Departments have outlined the policy in writing to the federal prosecutors and financial institutions around the US, the report said.
The guidelines did not promise banks immunity. However, the banks can avoid criminal prosecution for crimes like money laundering if it complies with various conditions, like avoiding marijuana businesses that sell to underage individuals or traffic illegal drugs. In the memorandum, Deputy Attorney General James Cole said that prosecution might be warranted if banks do ignore illegal transactions by not performing "appropriate due diligence of the customers' activities," the report said.
The guidelines expand those issued in August when the administration pledged more flexibility to states dabbling with marijuana legalization. The administration said enforcement would be geared towards pot suppliers that operate outside the regulation of the state or those using the business as a front for the trade in unlawful drugs, the report said.
Officials said the most recent directive is intended to address the public safety issues faced by legitimate and state-licensed pot shops because of their inability to tap financial services. Proprietors of legal pot shops have said that buying inventory, paying employees and doing sales in cash required costly security measures and placed them at risk for theft, the report said.