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Mon February 17, 2014
U.S. Banks Now Open For Marijuana Business
Originally published on Mon February 17, 2014 2:18 pm
Legal marijuana sellers across the country now have an easier place to deposit those wads of cash.
The Obama administration has issued guidelines to banks on doing business with licensed marijuana operators, giving them the green light to finance and set up checking and savings accounts with marijuana businesses.
And there may be a lot of money to deposit. According to the National Cannabis Industry Association legal U.S. industry is expected to reach $2.57 billion dollars in sales this year.
Paula Dwyer, an editor at Bloomberg View, joins Here & Now’s Meghna Chakrabarti to discuss the new guidelines.
- Paula Dwyer, editor for Bloomberg View. She tweets @paulaEdwyer.
MEGHNA CHAKRABARTI, HOST:
From NPR and WBUR Boston, I'm Meghna Chakrabarti. It's HERE AND NOW.
Medical marijuana is legal in 20 states, at the District of Columbia. Recreational marijuana is legal in Colorado and Washington. But one of the biggest issues that retailers face in these states aren't the marijuana laws but where to put their cash. That's because banks are hesitant to be part of the marijuana business due to the fact that pot is still illegal according to federal law. But the Obama administration has now issued guidelines to banks on doing business with licensed marijuana sellers.
Paula Dwyer is an editor at Bloomberg View, and she joins us now with more. And, Paula, first of all, briefly tell us what are these new guidelines.
PAULA DWYER: The guidelines come from the Justice Department and the Treasury Department in Washington. And in essence, they're saying, we know it's still illegal but we will look the other way when banks accept pot dealers' cash. And in exchange, the banks must help Washington make sure the cash isn't coming from other illegal activities, such as international drug traffickers, heroine and meth dealers and the like.
CHAKRABARTI: OK. And how are banks reacting to this? Are they seeing this as the federal government opening the door to them helping finance a new business?
DWYER: You know, the banks are happy that these guidelines are finally out, but they are still very nervous about accepting this kind of cash because it is still illegal. And it is basically saying, you do this at your own risk. The government - the federal government is saying, we're not going to crackdown on you, but you do have to share in our law enforcement role. You have to help us make sure that this money isn't money laundering or this isn't terrorist money and so forth. So the banks are very worried because another administration could come along and reverse all of this.
And also, they might make a mistake. They might say that this money is coming from a legitimate marijuana dealer, but the marijuana dealer might be a front for something else.
CHAKRABARTI: Hmm. Now, for some time, the medical marijuana dispensaries - and now in Colorado and Washington - the recreational marijuana sellers have had to use some pretty interesting tactics to, you know, to put their cash somewhere, for example, creating holding companies or depositing under names that don't indicate that they're marijuana dealers. I mean, so what does this news about news banking regulation mean for them?
DWYER: Well, it - for the marijuana dealers, it's really a huge green light that they are one step closer to legitimacy. It means that they can run like a real business with bank accounts. They can pay taxes. They can meet a payroll. They can hire people like lawyers and accountants. They can be regulated, which after all, is the whole idea. If the state says, in exchange for you coming out from the shadows, you must submit to our regulations, so for example, you don't sell to minors or saw that you're not selling other illegal drugs, then the dealers can now be legitimate. And they can hire people. They can get loans to expand. It's really a good thing for them. But it all depends on their being able to use the banking system, and that's where the big glitch is.
CHAKRABARTI: Right. And how much of the entire banking system do these new guidelines cover? Do they include, for example, credit card processing companies as well?
DWYER: Well, the credit card companies, MasterCard and Visa especially, the biggest, have said, we are going to leave it up to the banks. And so the banks have said, well, wait a minute, you know, that puts all the onus on us. And that's why the U.S. government has come out with these guidelines. So it does seemed to make it OK for the credit card companies to accept your credit or your debit card if you go into one of these dispensaries. So there may not be as much cash laying around. So this does help in that sense.
CHAKRABARTI: Hmm. Well, Paula Dwyer is an editor at Bloomberg View, walking us through the new guidelines that the Obama administration has issued regarding banking and legalized marijuana in those 20-so states across the country. Paula, thank you so much.
DWYER: Thank you.
CHAKRABARTI: You're listening to HERE AND NOW. Transcript provided by NPR, Copyright NPR.