Eric Holder Promises to Reassure Banks About Taking Marijuana Money 'Very Soon'



Yesterday Attorney General Eric Holder said the Obama administration will offer guidance "very soon" to banks that are leery of dealing with state-licensed marijuana businesses because they worry about attracting unwelcome attention from federal regulators and prosecutors. Because marijuana is still prohibited by federal law, simply accepting deposits from cannabusinesses could be viewed as money laundering or aiding and abetting drug trafficking. That risk has made it difficult for state-legal marijuana suppliers to arrange banking services, so they often deal exclusively in cash, which makes their businesses vulnerable to theft and hard for the government to monitor.

"You don't want just huge amounts of cash in these places," Holder said during an appearance at the University of Virginia. "They want to be able to use the banking system. There's a public safety component to this. Huge amounts of cash, substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited, is something that would worry me, just from a law enforcement perspective."

Brian Smith, spokesman for the Washington State Liquor Control Board, which will regulate the marijuana stores that are expected to start opening in that state this summer, agrees that all that cash is "a problem for everyone involved." The "smoothest way" to deal with it, he says, would be legislation passed by Congress, but he rates the chances of that happening as "slim to none." He hopes a policy statement from the administration will avoid the prospect of marijuana retailers delivering their taxes in armored trucks.

During testimony before the Senate Judiciary Committee in September, Deputy Attorney General James Cole said Justice and Treasury Department officials were conferring about how to address the marijuana banking problem. Yesterday Holder reiterated that "we're in the process now of working with our colleagues at the Treasury Department to come up with regulations that will deal with this issue." It is not clear how those regulations will work or how, in the absence of new federal legislation, the Justice Department can assure banks that they won't be prosecuted for serving businesses that federal law classifies as criminal enterprises. "The rules are not expected to give banks a green light to accept deposits and provide other services," The New York Times reports, "but would tell prosecutors not to prioritize cases involving legal marijuana businesses that use banks."

That is similar to the approach the administration has said it will take with cannabusinesses that comply with state law in Washington, Colorado, and the 18 states that allow medical but not recreational use. The policy, described in an August 29 memo from Cole, makes no promises, leaves a lot of leeway for federal intervention, and can change at any moment. Will the yellow light that reassured plucky marijuana entrepreneurs make banks comfortable enough to welcome the business of federal felons? 

"We'll see something like the August 29 memo but from [Treasury Secretary] Jack Lew and and Holder," says Alison Holcomb, the ACLU lawyer who ran Washington's legalization campaign. "They may include specific steps [indicating] what [they'll] do if [they] think there's a problem to give banks that extra assurance. Sort of like the DEA letters to [dispensary] landlords: We're going to fire a shot over your bow before we do anything. They may have to go that far to reassure larger banks. But Bank of America has already agreed that it's going to hold the marijuana excise tax fund here in Washington. That's a step removed, but it's still marijuana activity. I think the banks are ready, or at least a sufficient number [are ready], to provide services. We just need some piece of paper that they can point to."

Reason TV on the banking challenges facing a medical marijuana dispensary in Washington, D.C.:

NEXT: Great News: Economic Mobility Has "Remained Remarkably Steady" For Decades

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Well that’s mighty white of him.

  2. cannabusinesses

    Stop that.

  3. I need to open a Washington-only bank that exclusively serves “cash-only” businesses.

    1. Are you talking about Washington state or Washington, D.C.? Because I’ve heard that – while some residents of DC like cold, hard cash – they keep it cold and hard by storing it in the freezer.

      1. Yeah, but the freezers are in Louisiana.

    2. Pretty sure that STILL comes under Federal banking regulations.

      1. Epi’s just talking about holding money for his mom.

        1. She does move a ton of weed. Also, she has that ounce of Fruity Juice you ordered, Hugh.

  4. Not to worry, if the banks lose large sums of money by way of the DEA seizing their assets for money laundering, I’m sure there’s a TARP program for that.

    1. Stimulus!

  5. Following up with what I said re the VA SSM case, I can see requiring govt attorneys to defend laws approved by the people (subject to the same ethical requirements as with any other client), but I suspect that, thanks to separation of powers, executive officials have more leeway with a statute enacted by a legislative body. Here, if the Obama administration simply declared that the Congressional drug statutes violate the 10th Amendment, so they’re not going to enforce them, I would applaud.

    1. Of course they won’t invoke the 10th Amendment, they’ll say “we believe this statute is unconstitutional but we’ll undertake to carve out exceptions because we’re awesome.”

      1. “we believe this statute is *constitutional*”

    2. The problem is that the third branch has already said nothing violates the 10th Amendment. So it’s 2 against 1. (Yeah, I know. “You and what army?”)

      1. Two words: Commerce Clause

    3. Federal statists don’t want anyone to so much as realize the existence of the 10th amendment, let alone acknowledge its validity by invoking it in the manner described.

  6. I wonder if Mr. Holder just realized it will take legislation to make banks feel comfortable with taking pot money and he’s in the wrong branch of government…

    1. “If you like your pot money, you can keep it, period.”

  7. So you can’t keep your health insurance or your doctor. But you can get a loan to start a marihuana business. Well that makes it all better.

    1. marihuana

      It’s cannabis, John, marijuana is a racist word, especially when it’s not spelled with a ‘j’, (;

  8. Looks like cops used one of those pre-written reports for the Beeeeeeber arrest. The wording is always the same on all of them.

    1. I can probably still recite the copspeak for DUI arrest testimony in IL.

  9. The feds know that they have lost the conventional WOD. So now it’s time for the unconventional WOD. It’s sort of the like the switch from attacking random countries with conventional military force, towards random droning and the war on terror.

    The new drug war will be fought with Obamacare and a massive infusion of crony bucks into drug treatment centers ran by the politically connected cronies of whatever administration is in charge at the time.

    Ok, back on topic. This cannabiz is a risky venture for the entrepreneur. But it’s a big win for the government. If the biz isn’t generating enough revenue, you just invoke federal drug laws and seize all of their assets. If they are paying off enough, you leave them alone. We’re moving towards a system of lawlessness where an administration just interprets and enforces laws based on their own best interest.

    1. “Moving towards”? No, we were always there. It’s just that this crew of thugs is far more obvious about it.

  10. I feel like we’re living in the 20’s. “Nice little speakeasy ya got there. Be a shame if the cops stopped ignoring it…”

    Fuck Holder, fuck obama, fuck Congress, fuck America and fuck you. Fuck.

  11. 4 months later: Select Banks Subject to Asset Forfeiture Due to the Acceptance of Business with Marijuana Suppliers

  12. “You don’t want just huge amounts of cash in these places,” Holder said during an appearance at the University of Virginia. “They want to be able to use the banking system. There’s a public safety component to this. Huge amounts of cash, substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited, is something that would worry me, just from a law enforcement perspective.”

    Eric Holder is a fucking ignoramus. I never would have guessed.

    1. Fucking safe deposit boxes, how do they work?

      1. Trust me, Holder knows how they work and is working very hard to try and find a way to keep them from working.

    2. He is a cop. Cops hate cash almost as much as they hate dogs. Cops and cash is like retards and cake. A cop will drive across four lanes of traffic if he thinks there is some citizen over there with cash.

  13. He hopes a policy statement from the administration will avoid the prospect of marijuana retailers delivering their taxes in armored trucks.

    Garbage bags full of crumpled one dollar bills. “Go ahead and count it. I’ll wait.”

  14. Uncertainty allows for the capriciousness the king enjoys.

  15. Is there anyone who believes that banks taking pot money is going to end any other way than with the Feds shaking down those banks for huge “fines” or “settlements” and saying, “you fucked up, you trusted us?”

    No thank you, I would need legislation on this.

    1. Here is the thing, it is illegal to accept the proceeds of a criminal action. Once pot dispensaries get access to banks, how long before illegal pot sellers start using the dispensaries as a way to launder money? About five seconds maybe. Once that happens the banks will be on the hook for any illegal money within those deposits.

      I wouldn’t touch this with a ten foot pole if I were a bank.

  16. Herb: There’s a lot of potential here for the Feds to weed out unfavored businesses.
    Mary Jane: Can a bus service deny anyone ridership? Same thing here. Do be the naysayer, though.
    Herb: And you be wacky. Really, you think if presumably, the devil’ll let us grow our own or buy it in a store, it won’t play faves?
    Mary Jane: I’ll admit than cronyism is a chronic problem, but, shit, you’re trying to take the fun out of the fact that the law just changed.
    Herb: C’mon. Quit asking what Buddha would do. We’re dealing with the fuzz. Your ass is grass if they wish it to be so. Don’t get bowled over by candy-ass promises.
    Mary Jane: Quit acting like you fell off a wave and ground your face in a reef or something. ‘Yo! Da cops a comin! You betta take it in do’!’ You sound paranoid.
    Herb: Rough winds do shake the darling buds! I’m outta this joint!
    Mary Jane: Don’t go. I ‘hemp’ you!

Please to post comments

Comments are closed.