Despite bankers’ varied attitudes about legalizing marijuana, now that it is legal in Colorado, banks are supportive of government efforts to permit financial services for marijuana businesses. However, numerous obstacles prevent banks from serving marijuana businesses and their customers as they conduct legal activities.

Colorado can’t regulate or tax an industry for which it cannot track money. Public safety risks associated with cash-heavy businesses cause concern. And several federal laws preclude banks from serving these businesses, regardless of state law. Only Congress can resolve this.


While recent comments by U.S. Attorney General Holder indicate his plans to issue “guidance” against prosecuting banks for providing accounts to marijuana businesses, he cannot change the fact that marijuana remains illegal at the federal level and banks must follow all laws. You can’t change water into wine. Banks are responsible to regulators, most of which are independent and uncontrolled by the president’s executive branch. The idea of no prosecution is nice, but to banks regulators have the real power.

The only real solution is an act of Congress, which isn’t likely in the near future, though needed. Elections can bring a change in guidance – and Holder’s directive would be the fourth Department of Justice formal position on marijuana in recent years. Put simply: banks need the permanence of law versus changeable guidance.

A number of federal laws now preclude banks from opening accounts related to marijuana. The Controlled Substances Act (CSA) prohibits everyone, including banks, from dealing with controlled substances or the proceeds from them, like the cash from a pot shop. A bank commits money laundering by accepting deposits from marijuana activities. The Bank Secrecy Act (BSA), Anti-Money Laundering laws and Know Your Customer doctrine hold banks responsible when customers engage in federally illegal activities, even if a customer attempts to disguise the true nature of an account or a deposit’s origin.

Some bank customers have gone to great lengths to disguise accounts related to marijuana, even spraying deposited cash from “Susie’s Cookies” with Febreze air freshener, for example. But banks, as required by these laws aimed at fighting organized crime and terrorism, are on the lookout for attempts at money laundering and must file Suspicious Activity Reports (SARs) if anything appears amiss – and pot-related deposits fall in that category. Last year, about 1.6 million SARs were filed in the U.S. and 342 people were sentenced to an average of 40 months in prison as the result. Bankers face criminal and civil penalties should they fail to act on their suspicions. These laws can’t simply be swept aside; they are both technically and politically complex.

Regulators can impose various civil money penalties, cease and desist orders, fines and can ban bankers from their careers for life, should they violate federal law.To provide services to marijuana businesses, a bank would require numerous “green lights.” To date, banking has seen only “red lights” from federal laws, the Department of Justice, bank regulators and others. Attorney General Holder’s statement at best indicates a forthcoming “yellow light” from the federal Treasury.

Among needed “green lights” are: detailed in-hand guidance from bank regulators about legal and regulatory obligations and a high probability of no regulatory action against a bank. Others needed are internal regimens to comply with numerous laws requiring special handling and massive reporting on marijuana deposits, and a low likelihood of private litigation, as well as the go-ahead from banks’ own attorneys. Additionally, a low prospect of prosecution now or in the future must be secured. The AG is able to provide this item, but not the others.

Some have advanced the idea of a state-owned bank as a solution, but it won’t work. While a state can own its own bank, the moment it connects to the payment system with checks, ATMs, debit or credit cards, internet banking or wire transfers, federal law applies to it, the same as any other bank. State ownership would do nothing other than to conveniently aggregate marijuana-related deposits in one location for federal seizure.

Governor Hickenlooper has pressed for an answer. H.R. 2652 by U.S. Representative Perlmutter and others could accomplish a solution by prohibiting federal regulators from punishing any bank servicing marijuana businesses in states where it has been legalized and regulated.

Banking services would greatly resolve state regulation and taxation issues, serve customers and businesses in legal transactions and help public safety. Only Congress can make that happen.

Childears is president and CEO of yhe Colorado Bankers Association.