One of the biggest worries marijuana businesses have in states like Colorado and Washington, where recreational use is now legal, was that they’d be shut out of financial institutions and be stuck with cash-only transactions. That worry is now likely allayed today as the federal government has given the go ahead for banks to offer services to the legal marijuana industry, as it said it would earlier this year.
Of course, that green light comes with some strings — banks will still have to report any suspicious activity they see in the industry to federal authorities, to thwart any illegal drug cartels or others from trying to take advantage or launder money, reports the Denver Post.
The U.S. Department of Justice and the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury, said in a joint statement today that the move gives “greater financial transparency” to an industry that’s only legal in two states for recreational use, and about 20 others for medical use.
Under these guidelines, banks will have to help law enforcement by providing information that is “particularly” valuable and filing reports to give an inside look at the inner workings of the marijuana business.
“Law enforcement will now have greater insight into marijuana business activity generally,” FinCEN said in a news release, “and will be able to focus on activity that presents high-priority concerns.”
Right now banks have to file suspicious activity reports (or SARs) when they think something fishy is going on that might have a drug connection. The new guidance outlines three tiers of SARs to use just for marijuana businesses: “marijuana limited,” “marijuana priority,” and “marijuana termination.”
“This reduces the burden on banks,” a senior FinCEN official said in a briefing before the guidance was officially announced. “Marijuana under federal law requires a SAR. Now, the necessity is limited, reducing the banks’ burden a bit and more importantly clarifies where law enforcement focuses its attention.”
It’ll be a big help to businesses that thus far have been worried about conducting transactions using only cash, as it makes them a target for robberies. Not to mention, not everyone wants to use cash.
The “guidance seeks to mitigate the public safety concerns created by high-volume cash-based businesses without access to banking and the financial system, while at the same time ensuring that criminal organizations, gangs and drug cartels do not have access to the financial system to launder criminal proceeds,” Colorado-based U.S. Attorney John Walsh said in a statement.