Pubdate: Sat, 15 Feb 2014
Source: Baltimore Sun (MD)
Copyright: 2014 The Baltimore Sun Company
Author: Timothy M. Phelps and Jim Puzzanghera, Tribune Newspapers


No Guarantees, but Administration Lets Sellers Use Banks

WASHINGTON - The Obama administration, taking the first regulatory 
step to accommodate the country's growing state-approved marijuana 
businesses, issued guidelines designed to bring dispensaries into the 
banking system.

But Friday's step was a cautious one, reflecting conflicting 
pressures on the administration.

On one side, many states allow the sale of marijuana for medical or 
recreational use. Attorney General Eric Holder said last month that 
law enforcement agencies were concerned about marijuana sellers who 
are forced to deal in cash because they can't get credit card 
accounts issued by banks.

At the same time, federal law classifies marijuana as illegal, and 
many in law enforcement have privately criticized the 
administration's actions to rein in prosecutions.

The move drew praise from marijuana advocates but seemed likely to 
fall short of the reassurance banks have sought that they will be 
free from the risk of prosecution if they deal with marijuana-related 

The guidelines issued by the Justice and Treasury departments say 
that if banks follow new procedures and avoid marijuana businesses 
that raise red flags, such as selling to minors, prosecution "may not 
be appropriate."

Bankers and their advisers wondered how they could be expected to 
enter the legal limbo created by the new policy.

"We believe the vast majority of banks - especially publicly traded 
banks - will avoid marijuana retailers despite the guidance," said 
Jaret Seiberg of financial services firm Guggenheim Partners. "The 
risk of a violation, in our view, far outweighs any monetary benefit."

Two states, Colorado and Washington, voted more than a year ago to 
allow the sale of marijuana for recreational, as well as medical, 
use, while 18 states - including Illinois, Connecticut and California 
- - and the District of Columbia allow it for some medical purposes.

The Justice Department indicated in August that it would not attempt 
to block the implementation of those laws as long as marijuana 
businesses did not sell across state lines or cross other red lines.

William Rubenstein, commissioner of Connecticut's Department of 
Consumer Protection, said he was pleased that the federal government 
is "not looking to place obstacles in well-run state programs."

"We don't run afoul of any of the concerns that the Department of 
Justice has laid out," he said.

Obama and Holder have indicated they have no desire to be tough on 
pot, with Obama saying in a New Yorker article that marijuana use is 
not more dangerous than alcohol.

But the step announced Friday reflects a reluctance to go too far 
because of solid opposition to marijuana legalization within law enforcement.

In January, after Obama's comments were published, Drug Enforcement 
Administration chief Michele Leonhart, in a private meeting with 
sheriffs, was critical of the president's views.

Advocacy groups said the Obama administration had gone as far as 
could be expected.

"It's another indication that the Obama administration seems to be 
acting in good faith when it comes to trying to give Colorado and 
Washington the ability to implement their laws in the best possible 
way," said Ethan Nadelmann of the Drug Policy Alliance.

Tribune Newspapers' William Weir contributed.
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MAP posted-by: Jay Bergstrom