Pubdate: Wed, 29 Jan 2014
Source: Orange County Register, The (CA)
Copyright: 2014 The Orange County Register
Contact:  http://www.ocregister.com/
Details: http://www.mapinc.org/media/321
Author: David Hood

BANKS FEAR PUNISHMENT IF TIED TO POT DISPENSARIES

Marijuana Is Legal in 20 States and the District of Columbia in Some 
Form. in California, It Is Permitted for Medical Use in Small Quantities.

WASHINGTON  California banks still will not take deposits from or 
lend money to legal medical marijuana dispensaries because the banks 
say they still run the risk of severe penalties  despite indications 
last week from the Department of Justice that it will rethink its 
prosecutorial approach.

U.S. Attorney General Eric Holder announced Jan. 23 that his 
department would review rules that have bankers apprehensive about 
providing even basic banking services to marijuana dispensaries 
deemed legal by state lawmakers.

Marijuana is legal in 20 states and the District of Columbia in some 
form. In California, it is permitted for medical use in small 
quantities (generally no more than 8 ounces) with a doctor's recommendation.

But under federal law, marijuana is considered a dangerous drug and 
is illegal to grow, sell or possess.

Holder's actions won't be enough for California bankers. Marijuana 
would have to be legal at the federal level for bankers to open their 
depositories to pot retailers, said Beth Mills, vice president of 
communications for the California Bankers Association.

"Marijuana is categorized as a Schedule I drug, therefore it is 
considered to be no different than heroin," Mills said. "Allowing 
marijuana dispensaries to bank would be the same as allowing banking 
services to heroin dealers."

Even in light of President Barack Obama's "safer than alcohol" 
remarks to The New Yorker magazine about the drug, Mills and members 
of the banking organization are not convinced changes in the 
Controlled Substances Act are coming. She said that until there is 
tangible proof that marijuana is removed from the law governing 
dangerous drugs, little will change.

Marijuana groups are seeking legal remedies, because not being able 
to access basic banking services means retailers operate on a 
cash-only basis. Cash piles up, making them vulnerable to thieves.

"Collectives want to be able to pay taxes and operate like other 
businesses," said Kandice Hawes, executive director for the Orange 
County chapter of the National Organization for the Reform of Marijuana Laws.

In Colorado in 2012, before the state legalized marijuana for 
recreational use, a bill was introduced in the state senate to allow 
then-legal medical marijuana dispensaries to create a "financial cooperative."

The bill would have allowed dispensaries to form a financial 
institution akin to a credit union. The bill never made it out of committee.

Rob Rowe, vice president and senior counsel of the American Bankers 
Association, said Monday that the only true solution is to legalize 
marijuana at the federal level.

"One of the key things is federal deposit insurance," Rowe said. "In 
some way, there has to be a connection to the banking system. In an 
independent cooperative, they can hold the money in their own vault, 
but then they need to get that into the bigger payment system which 
is under federal control."

Mills said that banks run the risk of racking up massive penalties 
and bad reputations with charges as serious as money laundering if 
they provide services in California because the banking industry is 
under a federal microscope.

"Unless the law changes," Mills said, the status quo will continue.
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MAP posted-by: Jay Bergstrom