Pubdate: Sat, 15 Feb 2014
Source: San Jose Mercury News (CA)
Copyright: 2014 Associated Press
Contact:  http://www.mercurynews.com/
Details: http://www.mapinc.org/media/390
Author: Pete Yost, Associated Press

OFFICIALS GUIDE BANKS ON NEW POT BUSINESSES

WASHINGTON (AP) - The Obama administration on Friday gave banks a 
road map for conducting transactions with legal marijuana sellers so 
these new businesses can stash away savings, make payroll and pay 
taxes like any other enterprise. It's not clear banks will get on board.

Guidance issued by the Justice and Treasury departments is the latest 
step by the federal government toward enabling a legalized marijuana 
industry to operate in states that approve it. The intent is to make 
banks feel more comfortable working with marijuana businesses.

Others have an interest, too, in a regulated financial pipeline for 
an industry that is just emerging from the underground. Marijuana 
businesses that can't use banks may have too much cash they can't 
safely put away, leaving them vulnerable to criminals. And 
governments that allow marijuana sales want a channel to receive taxes.

But a leading fi nancial services trade group expressed misgivings 
and others, too, said the guidelines don't go far enough in protecting banks.

"After a series of red lights, we expected this guidance to be a 
yellow one," said Don Childears, president and CEO of the Colorado 
Bankers Association. "This isn't close to that. At best, this amounts 
to ' serve these customers at your own risk' and it emphasizes all of 
the risks."

Washington and Colorado in 2012 became the first states to approve 
recreational use of marijuana.

Currently, processing money from marijuana sales puts federally 
insured banks at risk of drug racketeering charges, so they've 
refused to open accounts for such businesses.

Friday's move was designed to let institutions serve the businesses 
while ensuring that they know their customers' legitimacy and remain 
obligated to report possible criminal activity, said the Treasury .

The American Bankers Association said "guidance or regulation doesn't 
alter the underlying challenge for banks. As it stands, possession or 
distribution of marijuana violates federal law, and banks that 
provide support for those activities face the risk of prosecution and 
assorted sanctions."
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MAP posted-by: Jay Bergstrom