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With New Rules, Pot Business Gets A Little Less Hazy For Banks
Originally published on Fri February 14, 2014 6:58 pm
ROBERT SIEGEL, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
The Treasury and Justice Departments today sought to clarify for banks how they might navigate the murky legal waters of the marijuana business. Murky because pot is legal in a growing number of states but remains illegal under federal law. NPR's Yuki Noguchi reports on these new terms under which a bank must operate if it wants to offer financial services to this emerging industry.
YUKI NOGUCHI, BYLINE: In the absence of specific federal guidance, most banks had kept marijuana businesses at arms' length, denying them loans, checking or savings accounts - which meant that, like the street-drug trade, many state-sanctioned pot-sellers were doing a cash-only business. Taylor West is deputy director of the National Cannabis Industry Association. She calls the rules a victory for her group's members.
TAYLOR WEST: They've had to do things like payroll entirely in cash. It creates huge security issues for the businesses, for their employees, and then it also makes it more difficult for them to handle the transparent accounting that the industry is trying to put in as a standard.
NOGUCHI: A division within the Treasury Department issued the rules today. They expand on a Justice Department memo issued last year that outlined broad-brush priorities for federal prosecutors investigating marijuana trafficking. Today's new rules set forth a laundry list of requirements, including that banks very closely monitor the revenue, deposits, withdrawals, and the businesses' owners and employees. And the banks must file reports with regulators if the transactions don't add up or otherwise look suspicious. West says some banks will see the new rules as a positive development.
WEST: We don't expect every bank in the country to immediately sign on. But I think there are a lot of banks that see that this is an industry that's projected to be worth $2.5 billion in 2014.
NOGUCHI: But the American Bankers Association disagrees. It says the new guidelines don't change anything and that banks would still face the risk of prosecution for getting involved with the pot business. Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.