In the fall of 2012, voters in both Colorado and Washington introduced a new era in the United States when they voted to legalize the sale of marijuana. In response to the landmark referenda, the Department of Justice issued a revised "Guidance Regarding Marijuana Enforcement" on August 29, 2013. The DOJ Guidance noted that the federal Controlled Substances Act includes several important priorities with respect to marijuana, including preventing access of minors to marijuana, preventing revenue from the sale of marijuana going to criminal enterprises, preventing violence, and preventing drugged driving. While the DOJ Guidance states that state and local law enforcement in jurisdictions that have legalized marijuana in some form should remain the "primary means" of addressing marijuana-related activity, the DOJ warns that the federal government may continue to "bring individual enforcement actions, including criminal prosecutions," focused on that activity.
The DOJ Guidance is completely silent, however, on the issue of the banking industry's relation to legal distributors of marijuana in states in which marijuana is legally regulated. The marijuana industries in Washington and Colorado have the potential to be hugely lucrative, but banking institutions cannot currently provide financial services to such businesses in the fear of enforcement activity by the federal government with respect to the Controlled Substances Act. Thus, marijuana-related businesses may remain cash-driven for the time being, which increases the possibility of money laundering and intermingling of funds with other illegal activities. In the wake of the DOJ silence on that important issue, two members of the House of Representatives introduced the Marijuana Business Access to Banking Act of 2013, a law that would create protections for banking institutions that provide financial services to marijuana-related businesses. The bill would prohibit federal bank regulators from terminating Federal Deposit Insurance Corporation deposit insurance to a bank that provides financial services to legal marijuana businesses. The bill would also exempt banks from prosecution solely for offering banking services to legitimate marijuana-related customers.
On October 2, 2013, the governors of Colorado and Washington, John Hickenlooper and Jay Inslee, wrote a joint letter to federal banking regulators asking them to issue guidance to allow licensed marijuana businesses access to banking services. Hickenlooper and Inslee wrote: "access to the banking system by these state-licensed businesses is a necessary component in ensuring a highly regulated marijuana system that will accurately track funds, prevent criminal involvement, and promote public safety." Hickenlooper and Inslee asked the federal banking regulators to provide guidance "to enable the banking industry to offer full banking services to state marijuana licensees."
To date, the Marijuana Business Access to Banking Act of 2013 has not been passed by Congress, and no guidance has been issued by federal banking regulators. However, there have been recent indications that the federal government may issue such guidance in early 2014. See Eric Gorski and David Migoya, US Treasury May Give Guidelines to Banks Working with Pot Companies, The Denver Post, December 19, 2013, http://www.denverpost.com/news/ci_24758079/treasury-may-give-yellow-light-banks-work-pot.
Massachusetts has legalized medical marijuana, and the first state dispensaries will likely open in 2014. As more states are likely to legalize marijuana in some form in coming years, it is important that banking institutions receive clarity from the federal government regarding whether offering banking services to legitimate marijuana businesses will be prohibited or sanctioned. Fitch Law Partners LLP will continue to monitor developments in this area as they arise.
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