The governors of Colorado and Washington want federal authorities to keep their end of a bargain in which regulators said they would give guidance on banking the marijuana industry once law enforcement gave theirs.
In a letter last week to the heads of the four major banking regulating agencies — the Board of Governors of the Federal Reserve, the Office of the Controller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration — Colorado Gov. John Hickenlooper and Washington Gov. Jay Inslee jointly and gently asked for “follow-up inter-agency guidance” to bank examiners and the banks and credit unions about how to do business with legal marijuana.
“Banks and credit unions in Colorado and Washington are waiting for the Federal Banking Agencies to furnish instructions given to bank and credit union examiners before deciding whether and how to provide banking services to state licensed recreational marijuana businesses,” the governors wrote in the May 23 letter made public Tuesday.
Several bankers privately have said they fear regulators more than prosecutors since they can create havoc for a financial institution.
The governors reminded the agencies that in November they had promised to “consider whether guidance would be appropriate” once the U.S. Department of Justice and the Financial Crimes Enforcement Network of the U.S. Treasury weighed in.
The November letter was in response to a Hickenlooper-Inslee letter of Oct. 2, 2013, that asked for the same form of guidance.
That happened in February, when Justice and FinCEN, as it is called, offered banks guidance on working with marijuana businesses. Specifically, the two agencies said financial institutions should file enhanced “suspicious activity reports” that identified the sources of their marijuana-related transactions.
It also reiterated prior Justice Department guidance, known as Cole memos, for the deputy attorney general who wrote them, that listed eight specific areas it would insist banks ensure marijuana businesses are not breaching, such as sales to minors or trafficking across state lines.
In essence, banks would be required to file additional paperwork about their business relationships but received no guarantee they would escape enforcement problems if one of their customers was later found to be tied to the illegal drug trade.
That caused many banks to balk at working with otherwise-legal marijuana businesses.
Colorado legislators tried to solve the problem with a final-hour push for the creation of a credit-union-like system for marijuana businesses to work through. That system still requires the approval of the Federal Reserve System, which oversees the nation’s money system.
The governors said guidance is critical, especially in Colorado where recreational sales began Jan. 1, and in Washington, where it’s to begin in June or July, “exposing all involved to the significant risks of criminal activity associated with accepting, storing and transporting large quantities of cash that can be ameliorated by access to the banking system.”
David Migoya: 303-954-1506, email@example.com or twitter.com/davidmigoya