Washington, D.C. — The Trump administration is weighing the removal of an Obama-era protocol that permitted banks to open accounts for marijuana-related businesses without being considered in violation of law, according to a recent report by Forbes.
In the wake of Attorney General Jeff Sessions’ move to overturn the Cole Memo, which had previously laid a hands-off federal policy towards state marijuana policy under the Obama administration, federal prosecutors will now be allowed to decide how to prioritize enforcing federal cannabis prohibition in relation to possession, cultivation or distribution in states that have legalized the drug.
With Sessions’ revocation of three Obama-era memos last month, which had provided guidance that allowed banks to provide their services to marijuana businesses without the risk of federal prosecution, the Treasury Department is now “reviewing the [banking] guidance in light of the Attorney General’s announcement and are consulting with law enforcement,” Drew Maloney, the U.S. Treasury Department’s assistant secretary for legislative affairs, wrote in a letter to members of Congress.
The @USTreasury responded last night to my letter on banking access for legal marijuana businesses. Banks and credit unions serving state-regulated marijuana businesses can continue despite @TheJusticeDept announcement. https://t.co/vLJeGs0Jgz
— Denny Heck (@LtGovDennyHeck) February 1, 2018
The letter from the Treasury Department was in response to an inquiry last month from a bipartisan group of 31 House members, that included a request for the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) agency to carry on with the cannabis banking guidance.
“FinCEN’s stated priorities have allowed such businesses to conduct commerce more safely through financial institutions which reduces the use of all cash, improves public safety, and reduces fraud,” the House lawmakers wrote in their letter. “Leaving your guidance unchanged will continue to encourage small companies to make investments by freeing up access to capital. It will also further provide for well regulation and oversight through suspicious activity reports. Rescinding this guidance would inject uncertainty in the financial markets.”
According to the report by Forbes:
“The FinCEN document, issued in 2014, laid out a process for how banks can open accounts for marijuana businesses and avoid triggering federal enforcement actions.
The FinCEN policy, which requires financial institutions to regularly file reports on their cannabis customers, was intended to provide clarity and assurances to banks, but many have remained reluctant to work with marijuana businesses because of overarching federal prohibition laws.
Nonetheless, documents released by FinCEN late last year showed that the number of banks willing to work with the marijuana industry has steadily grown over time, though those figures were collected prior to Sessions’s move to revoke the broader Justice Department guidance.”
While cannabis use has been legalized or decriminalized in a majority of U.S. states, it is still considered a Schedule 1 substance— denoting no accepted medical use— under federal law, which has created a conflict between state and federal law.
According to a report in the Wall Street Journal:
A significant chunk of the financial system—including most credit-card companies and all banks that have access to the Fed’s payments highway—is regulated by the U.S. government, which considers distribution and use of marijuana a crime. As a result, marijuana dispensaries have had to rely mainly on cash, raising security and logistical concerns.
Under the Obama administration, the Justice Department issued legal guidance indicating that its priorities in combating illegal drug trafficking didn’t include the sale and purchase of state-legalized marijuana. It said it would crack down on the marijuana industry only in cases tied to other criminal activities, such as distribution to minors, firearm violence or trafficking of other drugs.
Last month, in testimony before the U.S. Senate, Sigal Mandelker, Deputy Secretary of the Treasury Department, said that the FinCEN memo is still in effect while the Trump administration considers its revocation. On Wednesday, Maloney confirmed in his letter that prior guidance “remains in place” for now, and vowed to inform Congress of any policy changes.