Attorney General Eric Holder said Thursday that the Obama administration would soon announce regulations that would allow banks to business with legal marijuana businesses. Financial institutions have been scared away from such businesses by the threat of legal action for dealing in the profits of a commodity still illegal under federal law.
"You don't want just huge amounts of cash in these places. They want to be able to use the banking system," Holder said during an appearance at the University of Virginia's Miller Center. "There's a public safety component to this. Huge amounts of cash -- substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited is something that would worry me, just from a law enforcement perspective," he explained.
"We're in the process now of working with our colleagues at the Treasury Department to come up with regulations that will deal with this issue," and the new rules are coming "very soon," Holder said. "It is an attempt to deal with a reality that exists in these states."
Holder did not specify whether his remarks were aimed solely at Colorado and Washington, which have legalized marijuana commerce, or were directed more generally at states that allow for legal medical marijuana.
A Justice Department spokesman later "clarified" Holder's remarks to say that instead of new regulations, Holder was speaking of issuing a "guidance" to prosecutors and federal law enforcement. Whether such a "guidance" without further guarantees from the federal government will be enough to assuage bankers' fears remains to be seen.
But marijuana industry advocates applauded the attorney general's remarks.
For the legal, regulated cannabis industry, this is very welcome news," said National Cannabis Industry Association executive director Aaron Smith. "We have been anxiously awaiting clarity on the banking issue from the Justice and Treasury Departments for many months. To hear that guidance will be issued 'very soon' is encouraging. It's critical that we fix this issue before February 20, when our Colorado members must pay their first round of state taxes, or the Colorado Department of Revenue may be forced to accept more than $1 million in cash payments."
Smith added that the NCIA was "grateful" to Holder and other federal officials who have been working on the issue, and that getting it resolved "cannot come soon enough."