NEW YORK (TheStreet) -- The long-awaited guidance on banking for marijuana businesses is not giving the American Bankers Association very much comfort. The Department of Justice (DOJ) and the Financial Crimes Enforcement Network issued guidance on Friday clarifying expectations of financial institutions serving marijuana businesses, but the guidance fell short of what many businesses were hoping for.
"While we greatly appreciate the efforts by the Department of Justice and FinCEN, guidance or regulation doesn't alter the underlying challenge for banks. As it stands, possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution," said Robert Rowe, Vice President and Senior Counsel for the American Banks Association.
Rowe is right, the guidance makes it clear from the start that marijuana is still illegal under the Controlled Substances Act. It cites the Cole Memo from the DOJ that reiterates that marijuana is illegal and they can prosecute it, but it won't be the focus of their resources. Money laundering is the main concern for the DOJ and it puts the responsibility for this on the banks. Banks can open the accounts, but they will have to decide if it is worth the risk.
"The Department shares the concerns of public officials and law enforcement about the public safety risks associated with businesses that handle significant amounts of cash. These guidelines, together with the Treasury Department's guidance to financial institutions, are intended to increase the availability of financial services for marijuana businesses - that are licensed and regulated - while at the same time preserving and enhancing important law enforcement tools," said Allison Price, a Department of Justice spokesperson.