All-cash pot stores may soon be history.
After clearing the way for Washington state and Colorado to open retail marijuana stores, U.S. Attorney General Eric Holder now says the Obama administration will soon make it easier for them to operate by allowing them to use federal banks.
Currently, that's not allowed, because marijuana is a controlled substance that has been banned by Congress.
But Holder, speaking at the University of Virginia's Miller Center on Thursday, said the administration is working on new policy guidelines that would change that.
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"You don't want just huge amounts of cash in these places. They want to be able to use the banking system," Holder said. "There's a public safety component to this. Huge amounts of cash ---- substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited ---- is something that would worry me, just from a law enforcement perspective."
Colorado opened its recreational pot stores on Jan. 1, while Washington state is expected to follow this spring. The plan is to sell the drug much like liquor, to any adult over the age of 21. Twenty states also run medical marijuana dispensaries.
In August, the Justice Department said it would not block Colorado and Washington state from selling and taxing pot, so long as they do a good job of policing themselves.
Under federal law, accepting deposits from marijuana businesses is a violation of money-laundering laws, but prosecutors have discretion on what cases to pursue.
While the Justice Department could not waive federal banking laws, its new banking policy is expected to advise prosecutors to only pursue businesses that use retail stores as part of larger criminal efforts.
The Treasury Department, which oversees banks, has not yet said what it will do.
Some in Congress are eager to get the issue resolved.
"Every week that passes without new guidance is another week the regulated marijuana markets in Washington and Colorado must operate on a cash-only basis," Democratic Rep. Denny Heck of Washington state said Friday. "The potential for tax evasion, money laundering, and robbery is lingering over what voters want to be a safely regulated industry."
Heck introduced a bill last year to allow pot businesses to use banks, but it has languished.
Ethan Nadelmann, executive director of the Drug Policy Alliance, which backs legalization, said Holder's remarks are "yet another indication that the Obama administration really is trying to act in good faith" to responsibly regulate marijuana.
"I have to say I'm impressed by how the White House is trying to make this work, especially given the inability of Congress to do anything constructive in this area," he said.
Legalization opponents said pot stores will still face difficulties because any new guidance from the Department of Justice (DOJ) is unlikely to appeal to many banks.
"There's no assurance that a legal memo from DOJ is going to be enough for reputable banks to deal with a federally illegal substance," said Kevin Sabet, a former drug policy adviser for Obama who's now the director of Project SAM (Smart Approaches to Marijuana). "Banks would have legitimate concerns that the mom-and-pop store they think they are dealing with is actually a front for something much more serious, hidden under the shroud of legal marijuana."