US may help dagga shops get bank services

2013-09-11 09:08
Marijuana is weighed and packaged for sale. (Picture: AP)

Marijuana is weighed and packaged for sale. (Picture: AP)

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Washington - US law enforcement agencies are in talks about steps they may take under federal law to allow legal marijuana businesses to have access to bank accounts, a Justice Department official said on Tuesday.

Deputy Attorney General James Cole said at a Senate Judiciary Committee hearing that the existing situation of marijuana shops operating on a cash-only basis created too many dangers, such as possible robberies or fraud.

The Justice Department is reviewing the issue with the Treasury Department's Financial Crimes Enforcement Network (FinCEN), which targets money-laundering, Cole said.

"It's important to deal with that kind of issue, and we're at the present time talking with FinCEN, and they're talking with and bringing in bank regulators to discuss ways that this could be dealt with in accordance with the laws that we have on the books today," he said.

Although the Justice Department in August gave states new leeway to experiment with legalised marijuana, the drug remains illegal under federal law. As a result, under anti-money-laundering rules, banks are prohibited from handling proceeds from marijuana sales.

That means marijuana shops have a hard time getting banking services, such as checking and savings accounts that most US businesses consider essential.

Two states, Colorado and Washington, voted to legalise marijuana for recreational use in 2012, and about 20 states, plus the District of Columbia, allow the use of medical marijuana.

Cole did not say when US agencies would complete their review, or what the possible outcomes were. FinCEN spokesperson Steve Hudak said separately by phone that the agency was reviewing the latest developments.

Fearing tax evasion

Officials in Colorado and Washington are pushing the federal government to give banks and credit unions breathing room to take on marijuana businesses as clients.

"Cash-only businesses are very difficult to audit, leading to possible tax evasion, wage theft and the diversion of resources we need to protect public safety," Sheriff John Urquhart of Washington's King County testified at the Senate hearing.

If banking regulators do not agree to changes, supporters of marijuana legalisation have said they will push Congress to amend federal law to allow banking services.

Senator Chuck Grassley of Iowa, the top Republican on the Judiciary Committee, said legalisation supporters were overlooking the dangers of what he called a "dangerous and addictive drug".

"We already have a pretty good idea of how it works out, and the answer is: badly," he said, citing statistics about marijuana confiscated in his state that originated in Colorado.

Cole, in his testimony, said the Justice Department was faced with bad options before it said last month it would not sue to block the efforts in Colorado and Washington.

A federal lawsuit to block decriminalisation would not have been very successful, he said. On the other hand, he said, the Justice Department did not want to sue over state regulatory regimes, for fear it would result in marijuana being both legal and unregulated in the two states.

"There are no perfect solutions here," Cole said.

Read more on:    us  |  narcotics

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.
NEXT ON NEWS24X publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.