Pubdate: Wed, 11 Sep 2013 Source: Denver Post (CO) Copyright: 2013 The Denver Post Corp Contact: http://www.denverpost.com/ Details: http://www.mapinc.org/media/122 Author: John Ingold Page: 5A FEDS TO REMOVE HURDLES TO POT LEGALIZATION The U.S. Department of Justice is working to find a way for marijuana businesses to have bank accounts, the second major signal in a week that the federal government is willing to give marijuana legalization in Colorado a chance to succeed. Testifying on Tuesday before a U.S. Senate committee, Deputy U.S. Attorney General James Cole said Justice Department officials are in talks with officials from the Treasury Department on the marijuana industry's banking riddle. Federal law currently makes banks unwilling to work with marijuana businesses. Cole said the talks are focused on "ways that this can be dealt with in accordance with the laws that we have on the books today." "We agree that it is an issue we need to deal with," Cole said. Cole's comments continue the federal government's remarkable rapid shift on the marijuana industry. Last week, Cole wrote a memo that said the federal government does not intend to prosecute marijuana businesses that are playing by strict state rules, even though the businesses remain illegal under federal law. Cole re-iterated that policy on Tuesday. By also addressing the industry's banking problems, the federal government will have removed two main problems confronting pot entrepreneurs: the threat of going to jail and the dilemma of where to put the money. "We have every reason to believe they will take action on banking sooner rather than later," said Betty Aldworth, a spokeswoman for the National Cannabis Industry Association. Because federal law forbids banks from taking the business of criminal organizations, marijuana businesses have for years struggled to obtain bank accounts or credit card processing. That means many dispensaries operate as cash only - installing large safes in their shops and paying taxes in envelopes stuffed with cash. And it is a significant concern for officials in Colorado and Washington state who are preparing for recreational marijuana industries voters authorized in November. Marijuana advocates say the situation makes dispensaries a target for crime, while regulators say it makes auditing them difficult. "It would be so much easier to audit the books, make sure taxes are being paid, make sure stores are following the rules we put in place if they are able to work with banks," Jack Finlaw, Gov. John Hickenlooper's chief legal counsel, told the committee. Iowa Sen. Chuck Grassley, though, was skeptical that state regulations will be able to control marijuana, regardless of federal policy. Grassley cited audits of Colorado's medical-marijuana enforcement that found problems monitoring dispensaries. "Why has the department decided to trust Colorado to regulate recreational marijuana when it has already failed to effectively regulate medical marijuana?" Grassley, a Republican, asked. But Cole said the federal government has limited options. Even if the Justice Department shut down the state's forthcoming recreational marijuana stores, it could not overturn the new law that makes adult use and possession of marijuana legal. All that legal demand would be a boost to illegal suppliers, Cole said. "There are no perfect solutions here," Cole said. "If we just went after their regulatory scheme, instead of just having a bad one, they would have no regulatory scheme." - --- MAP posted-by: Jay Bergstrom