A watershed moment for cannabis banking could be on the horizon.
A group of finance leaders, federal regulators and law enforcement officials met today in Washington DC for a closed-door discussion on banking topics, including issues related to the marijuana industry.
One possible outcome: The group could pressure the government to allow banks to handle accounts from marijuana businesses that are compliant with state laws.
This would be a game-changer for the cannabis industry, removing one of the biggest hurdles to operating a marijuana company and clearing the way for more growth.
The gathering marks the first time the Federal Bank Secrecy Act Advisory Group (BSAAG) has met since the Department of Justice announced in late August that it will allow Colorado and Washington to proceed with marijuana sales. The DOJ also released new guidelines for federal prosecutors tied to marijuana enforcement, indicating it will not go after medical marijuana businesses complying with state laws.
Unfortunately, the BSAAG meeting is closed to the press and not subject to the Freedom of Information Act, so it could be impossible to find out the details of what was discussed. But an official said marijuana was on the agenda.
The group meets at least twice a year and is a key part of the Treasury Department’s efforts to update regulations tied to the Bank Secrecy Act, which requires banks to monitor their clients for money laundering.
Recommendations made at the meeting could eventually lead to changes in these regulations.
Currently, banks must notify federal officials of suspect transactions of $5,000 or more under the Bank Secrecy Act. Because of this, most banks have shied away from the medical cannabis industry, as all transactions can be considered suspect given that marijuana is federally illegal.
Fixing the situation for marijuana companies would require three steps.
First, the BSAAG would have to assure bankers that they won’t be prosecuting for doing business with marijuana operations in legal states. Then, the Department of Justice would need to agree not to prosecute bankers for money laundering in these states.
Finally, the federal government would need to relax the requirement that banks file “suspicious activity reports” about transactions that raise the suspicion of money laundering.
Pushing through such a significant change in the near future is somewhat of a long-shot, but it’s not entirely out of the question – especially now that the DOJ has given the cautious green light to recreational marijuana.
If marijuana banking hits a dead end through the BSAAG meeting, the industry’s other hope is for the federal government to remove marijuana from the Controlled Substances Act.