The Justice Department memo is written by Deputy Attorney General James Cole, who also authored guidance for U.S. Attorneys in the wake of Amendment 64 becoming law. But the meat of the proposal is sketched out in the Treasury Department document, catchily entitled "BSA Expectations Regarding Marijuana-Related Businesses," with "BSA" standing for "Banking Secrecy Act."
As you can see below, the document as a whole is complex. In general, though, the memo gives banks permission to offer financial services to legal marijuana businesses. But it also requires them to submit filings -- they're known as "Suspicious Activity Reports," or "SARS" -- on such transactions.The filings fall under three categories, with the distinctions between them dictated by a bank's sense of whether they're wholly legit or if they might violate the law in ways Cole outlined last year.
Category one is called "Marijuana Limited." It's explained in the following excerpt:A financial institution providing financial services to a marijuana-related business that it reasonably believes, based on its customer due diligence, does not implicate one of the Cole Memo priorities or violate state law should file a "Marijuana Limited" SAR. The content of this SAR should be limited to the following information: (i) identifying information of the subject and related parties; (ii) addresses of the subject and related parties; (iii) the fact that the filing institution is filing the SAR solely because the subject is engaged in a marijuana-related business; and (iv) the fact that no additional suspicious activity has been identified. Financial institutions should use the term "MARIJUANA LIMITED" in the narrative section.Category two is called "Marijuana Priority:"
A financial institution filing a SAR on a marijuana-related business that it reasonably believes, based on its customer due diligence, implicates one of the Cole Memo priorities or violates state law should file a "Marijuana Priority" SAR. The content of this SAR should include comprehensive detail in accordance with existing regulations and guidance. Details particularly relevant to law enforcement in this context include: (i) identifying information of the subject and related parties; (ii) addresses of the subject and related parties; (iii) details regarding the enforcement priorities the financial institution believes have been implicated; and (iv) dates, amounts, and other relevant details of financial transactions involved in the suspicious activity. Financial institutions should use the term "MARIJUANA PRIORITY" in the narrative section to help law enforcement distinguish these SARs.Finally, there's "Marijuana Termination:"
If a financial institution deems it necessary to terminate a relationship with a marijuana-related business in order to maintain an effective anti-money laundering compliance program, it should file a SAR and note in the narrative the basis for the termination. Financial institutions should use the term "MARIJUANA TERMINATION" in the narrative section.At first blush, this record-keeping seems onerous and dripping with potential liability -- perhaps so much so that banks may still shy away from working with marijuana businesses. That appears to be among the concerns of Michael Elliott, the Marijuana Industry Group's executive director. Moments after the memos' release, he issued the following statement:
"MIG's members are pleased the Justice and Treasury Departments and President Obama take seriously the banking crisis and the public safety issues it has created. We thank them for their attention to this problem. We hope today's guidance will give banks the comfort they need to begin doing business with the legal marijuana industry in Colorado.Continue to read the memos from the Departments of Treasury and Justice in their entirety."It is imperative that this legal industry have access to banking the same as every other business sector in Colorado. To continue doing business on a largely cash basis creates serious safety issues for owners, employees and customers.
"While we believe today's guidance should provide banks some of the assurances they need to begin doing business with the marijuana industry, it doesn't solve all the problems.
"We implore Congress to quickly address this critical public safety issue and pass HR 2652, the Marijuana Business Access to Banking Act, sponsored by Colorado Congressman Ed Perlmutter. Congressman Perlmutter's bill will provide certainty for banks and allow our industry to operate just like any other business.
"It is imperative that Congress not view today's guidance as the ultimate solution to this public safety crisis. Congress must act quickly to solve the problem before we witness a tragedy."
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More from our Marijuana archive circa November 2012: "Marijuana banking issue looms large in the wake of Amendment 64."
