Pubdate: Wed, 05 Feb 2014
Source: Middletown Press, The (CT)
Copyright: 2014 The Middletown Press
Note: Editorial courtesy of Bloomberg View,


Twenty states plus the District of Columbia now allow sales of
medicinal marijuana, allowing pot prescriptions to treat pretty much
any malady, from a headache to a hangnail.

Colorado and Washington have legalized the drug for recreational use,
too. Yet federal law still prohibits the possession, use and sale of
marijuana for any reason. This dichotomy explains why some banks are
reluctant to accept the large amounts of cash that pot purveyors
generate - even if the cash is legal under state law.

To redress this, U.S. Attorney General Eric Holder has promised to
issue guidelines to make it easier for marijuana sellers who are
operating in accordance with their state laws to use the banking
system. Large amounts of cash "just kind of lying around with no place
for it to be appropriately deposited," Holder mused, "is something
that would worry me, from a law enforcement perspective."

The fact is, Holder encouraged those bundles of unbanked cash to be
assembled in the first place. Last year, perhaps in a nod to opinion
polls showing that a majority of Americans favor marijuana
legalization, he said the Justice Department wouldn't seek to overturn
the Colorado and Washington measures. Nor, he said, would Washington
interfere with the 20 states that allow medicinal marijuana. Instead,
federal drug agencies and prosecutors would leave it to local
authorities to enforce marijuana laws.

All of which raises the question: When did it become acceptable for
the country's top law enforcement officer to decide which federal
statutes to enforce and which to ignore? Even those who agree with the
broader policy of marijuana legalization should be left uneasy by open
defiance of the rule of law.

Under the 1970 Controlled Substances Act, marijuana is classified as a
Schedule 1 drug, which means it has high potential for abuse, serves
no medical purpose and isn't safe even under a doctor's supervision.
As recently as 2005, the U.S. Supreme Court ruled that, even in states
that allow medical marijuana sales, sellers and users can be prosecuted.

Whether or not a law is outmoded, unpopular or overtaken by cultural
change, the attorney general doesn't have the authority to ignore it
altogether in half the country. To do so is wrong, and has practical
consequences: Holder's pronouncement caused a surge of cash to flow
from the black-market weed business into the regular economy. His
guidelines presumably will make it possible for buyers to use credit
and debit cards now - and for banks to accept those transactions -
without fear of reprisal. But some banks won't go along.

Banks are subject to federal banking laws, including the
anti-money-laundering statute, which discourages large deposits of
cash by requiring reams of paperwork to document where it came from
and where it went. When regulators don't enforce the rules, lawmakers
haul them in, Holder's blind eye notwithstanding.

What's more, in states that allow marijuana sales, a whole new pot
economy has grown up, complete with cannapreneurs, growers, equipment
makers, transporters and even private equity financiers. 
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