Our Voice: Feds should free banks to deal with marijuana industry

Licenses will be issued to marijuana retailers in our state in just a few weeks.

Voters in Washington legalized recreational pot with Initiative 502, and months of planning have gone into the processes and procedures dictating how the retail market will operate.

Even though pot is legal in Washington, the sale and possession of it are still federal offenses.

First, the Obama administration said it had better things to do than prosecute businesses operating in two states that have legalized recreational marijuana businesses as long they followed a list of requirements, including not selling to minors.

While that declaration eased some worries, it still didn't fix one big problem: banking. Because the sale and distribution of marijuana is a federal crime, banks could be prosecuted or sanctioned. As a result, they won't take on clients in the legal pot industry.

That has forced even legalized pot to be an all-cash business. And that is a dangerous proposition for pot proprietors, making them tempting targets for robbers looking for large sums of cash. Covert operations are required of these legal businesses to transport and store cash. And that's not right. If it's legal, it's legal.

The Obama administration has now given the green light to banks to do business with legal marijuana businesses with new guidelines, bringing praise from many fronts.

But not the banking industry.

"This guidance doesn't alter the underlying challenge for banks," said Frank Keating, president and chief executive of the American Bankers Association. "Possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution and assorted sanctions."

No major bank has stepped forward since the administration's announcement on changing its policy. It still seems to be, "Just say no," when it comes to dealing with the legalized pot industry.

In Colorado, pot businesses already face the challenges of customers who can only pay with cash. No credit cards, no checks, no debit. A busy store can do $25,000 a day.

Imagine trying to run any kind of business without a bank account. With employees and taxes to pay, cash is a burdensome system.

On the flip side, cash is hard to track. And an industry without banks could be an easy path for those wishing to avoid taxes, some say even an invitation for organized crime.

Estimates put the legal industry at $2.57 billion this year. Colorado expects to take in $184 million in tax revenues in the first 18 months since the industry became legal Jan. 1.

Many banks still say that even with the new guidelines, it's just too risky. Money laundering is not good for bank business, and that's essentially where this falls under federal law.

Guidelines were a good step, but the government needs to give some iron-clad assurances that banks can deal with legal industries without fear of prosecution.

Until then, the legal marijuana industry will have an air of illegality being forced to operate only on cash.

The government and the banking industry need to figure out a way to make these legal operators less like criminals and more like legitimate business owners. Financial institutions should be free to handle the finances of these legitimate businesses, from checking accounts to mortgages to payrolls.