Treasurers seek guidelines for banks serving pot industry
SALEM — Oregon Treasurer Tobias Read and several of his colleagues have asked to meet with U.S. Attorney General Jeff Sessions about what they say is a lack of guidelines for financial institutions in states where marijuana is legal.
In January, Sessions rescinded the "Cole Memos," previous DOJ notices that not only provided guidance to law enforcement in states where marijuana had been legalized, but also formed the basis of some preliminary guideposts for banks and credit unions that wanted to serve cannabis businesses.
Sessions' Justice Department now gives wide latitude to federal prosecutors to enforce drug laws in states where marijuana is legal under state law, a move that the group signing Thursday's letter says creates uncertainty for financial institutions.
"The absence of the Cole Memos now leaves the industry and financial institutions in the dark," states the March 29 letter, signed by Read and the state treasurers of Illinois, California, and Pennsylvania, as well as representatives of cannabis and financial industry groups.
"With legalization taking place, there are sound public policy reasons for providing financial institutions and other entities that do business with the cannabis industry some comfort that they will not be prosecuted, or lose access to customer assets, simply for banking this industry," the letter stated. "Among the policy positives that could result is greater public safety and more efficient collection of tax revenues."
In February 2014, the U.S. Treasury's Financial Crimes Enforcement Network recommended ways for financial institutions to comply with the Bank Secrecy Act — which requires U.S. financial institutions to detect and prevent money laundering — while providing services to cannabis businesses.
That guidance was largely based on the Cole Memos. However, U.S. Treasury Secretary Steven Mnuchin indicated in early February that the 2014 guidelines from FinCEN still stood until the treasury had a viable alternative.
"I assure you that we don't want bags of cash," Mnuchin told the House Financial Services Committee.
As of late September, about 400 banks and credit unions across the country served cannabis businesses, according to FinCEN.
While a few credit unions serve cannabis businesses in Oregon, it's not nearly enough to meet demand, and even so, the cost of banking is high, says Donald Morse, chairman of the Oregon Cannabis Business Council.
As a result, many cannabis businesses, especially smaller "mom and pop" outfits, still rely on cash, which poses security risks.
"Just storing and handling the cash, and using it to pay the bills, pay employees, and pay taxes, it's kind of crazy," Morse said. "I know people who have hundreds of thousands in cash squirreled away in different places, and they would love to have it in a bank, but they can't."
The Legislature exempted state-chartered banks and credit unions from criminal liability for doing business with legal marijuana enterprises under state law in 2016.
This week, U.S. Sen. Jeff Merkley, D-Ore., and some of his colleagues called for a hearing on Capitol Hill on a proposal, the Secure and Fair Enforcement Banking Act, that would prevent the feds from punishing banks solely for serving marijuana-related businesses.