With New Rules, Pot Business Gets A Little Less Hazy For Banks

Ever since Colorado and Washington legalized pot, banks have been in an awkward position. Would a bank risk being targeted by federal prosecutors for doing business with people whose primary business is selling marijuana? On Friday, the Treasury Department eased the confusion by releasing new guidelines for the banking industry.

Copyright © 2014 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

The Treasury and Justice Departments today sought to clarify for banks how they might navigate the murky legal waters of the marijuana business. Murky because pot is legal in a growing number of states but remains illegal under federal law. NPR's Yuki Noguchi reports on these new terms under which a bank must operate if it wants to offer financial services to this emerging industry.

YUKI NOGUCHI, BYLINE: In the absence of specific federal guidance, most banks had kept marijuana businesses at arms' length, denying them loans, checking or savings accounts - which meant that, like the street-drug trade, many state-sanctioned pot-sellers were doing a cash-only business. Taylor West is deputy director of the National Cannabis Industry Association. She calls the rules a victory for her group's members.

TAYLOR WEST: They've had to do things like payroll entirely in cash. It creates huge security issues for the businesses, for their employees, and then it also makes it more difficult for them to handle the transparent accounting that the industry is trying to put in as a standard.

NOGUCHI: A division within the Treasury Department issued the rules today. They expand on a Justice Department memo issued last year that outlined broad-brush priorities for federal prosecutors investigating marijuana trafficking. Today's new rules set forth a laundry list of requirements, including that banks very closely monitor the revenue, deposits, withdrawals, and the businesses' owners and employees. And the banks must file reports with regulators if the transactions don't add up or otherwise look suspicious. West says some banks will see the new rules as a positive development.

WEST: We don't expect every bank in the country to immediately sign on. But I think there are a lot of banks that see that this is an industry that's projected to be worth $2.5 billion in 2014.

NOGUCHI: But the American Bankers Association disagrees. It says the new guidelines don't change anything and that banks would still face the risk of prosecution for getting involved with the pot business. Yuki Noguchi, NPR News, Washington.

Copyright © 2014 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.