The federal illegality of pot hangs “like a cloud” over banks wanting to be involved in the medical marijuana industry, Rep. Dina Titus told an industry advocacy group Wednesday.
“Bankers are not allowed to do business with what is considered an illegitimate activity,” said the Nevada Democrat. “Dealing with marijuana is still illegal under federal law, so banks are hesitant to get into that business as much as they would like to.”
However, the best way to provide legitimacy to the new industry is to provide access to the federally regulated banks, she said.
“They see this as a good business,” Titus said during the Las Vegas Medical Marijuana Association luncheon. “It is certainly well-vetted and has possibilities for expansion. But that little threat hangs out there like a cloud.”
Titus addressed the association as Nevada is reviewing 520 medical marijuana establishment applications with the first of 66 state-approved dispensaries likely to open next year. Without access to banks, which includes patients not able to use credit cards, medical marijuana businesses will be largely cash-only, raising security concerns.
For banks, the concern is aiding and abetting in the distribution of narcotics and money-laundering under federal law.
John G. Sullivan, a Nevada Bankers Association board member, said Congress will need to change the federal Controlled Substances Act before many banks will feel comfortable in the industry.
“The sale of all medical marijuana products is a violation of (the act),” said Sullivan, who is president of 1st Security Bank of Nevada. “Anyone who is involved in it is guilty of that violation, which leads to violating money-laundering and organized crime criminal statutes.”
Although federal law enforcement and regulators have made statements that the federal government will not pursue medical marijuana participants at the state level, Titus said the fact that there is not “policy set in stone” concerns the banks.
The Treasury and Justice departments issued guidelines in February that stated that banks doing business with state legal medical marijuana businesses would not draw the attention of federal regulators and prosecutors. Washington, D.C., and 23 states have legalized medical marijuana. Titus said that is not enough because the Obama administration’s hands-off policy might change under a different administration in 2017.
“The administrative policy statements don’t give a lot of security to people thinking about investing (in medical marijuana),” Titus said. “Or doctors afraid they might lose their license.”
Titus, whose 1st Congressional District covers the urban areas of the Las Vegas Valley, supported a recent amendment to an appropriations bill stipulating that financial institutions working in the medical marijuana industry would not be penalized solely on that reason. The vote, which passed the Republican-controlled House 231-192, received support from fellow Nevada Reps. Steven Horsford, D, and Joe Heck, R. Republican Mark Amodei, whose 2nd Congressional District covers Northern Nevada, voted against the measure.
All four supported another amendment to separate appropriation bills that recently passed the House 219-189, stating that the Justice Department could not use funds to pursue and prosecute doctors, patients, growers, developers and cultivators who are abiding by state law.
Titus said she expects both measures to pass the Democratic-controlled Senate.
Titus said that the political atmosphere is not ready for pursuing a change in the federal drug classification of marijuana. According to the Justice Department, marijuana is a Schedule 1 drug with no accepted medical use, similar to heroin, LSD, quaaludes and Ecstasy.
“The notion of changing the categorization of marijuana is something for the future to look at,” Titus said. “Right now, there isn’t any chance (it) will get through the Congress, so you have to be smart about this.”
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