Pubdate: Wed, 19 Feb 2014
Source: USA Today (US)
Copyright: 2014 USA TODAY, a division of Gannett Co. Inc
Contact: http://mapinc.org/url/625HdBMl
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Details: http://www.mapinc.org/media/466
Author: Trish Regan
Page: 1B

DAZED, CONFUSED ABOUT POT AT BANK

Federal Moves Unlikely to Open Many Doors for Marijuna
Dispensaries

This marks the USA TODAY debut of Trish Regan, anchor and
editor-at-large for Bloomberg TV. Trish was named one of the most
popular business news anchors last year by BusinessInsider.com and has
worked at CNBC, CBS and CBS MarketWatch.

OK. So, maybe Dazed and Confused isn't the pot classic that Up in
Smoke is, but the cult coming-of-age film set in the '70s featured
enough grass to rank as Rolling Stone's No. 2 "Stoner Movie of All
Time." More important, Dazed and Confused seems to perfectly capture
the reaction to Friday's announcement from the Justice and Treasury
departments aimed at addressing the biggest challenge facing the
almost-legal marijuana industry today - lack of access to banks.

Banks have refused to do business with marijuana dispensaries
operating within the bounds of state laws for fear of being prosecuted
themselves. Federal law classifies marijuana as a Schedule 1 drug on
par with heroin, which means a bank doing business with a marijuana
shop can be accused of money laundering and racketeering. This has
left dispensaries in the 20 states and Washington, D.C., that allow
marijuana distribution in a challenging position; they can't let their
bankers know how they make money.

At Denver Relief, a dispensary in Denver where the smell of cannabis
permeates the room, workers undertake elaborate measures to ensure
that the money they collect from pot sales doesn't smell.

"There's no reason to rub somebody's nose in it," explains Ean Seeb,
who runs the facility. Seeb places his cash in a sealed bag, in a
separate safe, in a separate room - all in an attempt to keep it "clean."

If a bank gets a whiff of his so-called dirty money (yes, money smells
when surrounded by pot), his account will be shut down. Seeb is on his
second account, while many of his pot colleagues have churned through
as many as five banks in the last year.

Friday's moves by the Justice and Treasury Departments gave many hope
that the feds were making significant changes to address this banking
problem.

Instead, the memos show that the industry is still dealing with a
basic issue: Despite all the changes to state laws, popular support
and President Obama's recent remark that he considers marijuana no
more dangerous than alcohol, marijuana is still 100% illegal under
federal law. So, it's no wonder you might be dazed and confused
listening to the reactions that followed the release of the memos.

Aaron Smith of the NCIA (that's the National Cannabis Industry
Association for those who aren't in the know) seemed quite pleased,
telling local media he was "grateful" for the announcements. Ethan
Nadelmann of the Drug Policy Alliance was also optimistic telling me,
"Banks will be able to make money."

But, the Colorado Bankers Association calls this guidance a red light
for banks, stating, "At best, this amounts to 'serve these customers
at your own risk,' and it emphasizes all of the risks."

Where does this leave the fledgling multi-billion dollar industry?
Very much where it's been.

Although marijuana entrepreneurs are increasingly comfortable starting
businesses under permissive state laws and a federal "look the other
way" policy, the federally regulated banking system needs certainty.

Banks are supposed to be conservative. Between the additional red tape
associated with servicing a pot shop and the threat of a new
administration reversing policy, the downside risks are too
significant. Despite the industry's hopeful reaction, the view of the
Colorado Banker's Association is likely far closer to that of your
average bank president.

If the Obama administration can't truly effect change, why is it
warming to the idea of marijuana legalization? Cynics might argue the
president is trying to establish the Democratic Party at the forefront
of the marijuana movement ahead of this year's elections. With an
increasing number of states looking to legalize marijuana, this could
be the issue that brings younger, liberal Americans to the voting
booths in swing states this November.

In the meantime, I'd recommend dispensaries continue working hard to
keep their money smelling clean.
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MAP posted-by: Matt