The U.S. Justice Department's decision to turn a blind eye to
the enforcement of federal marijuana laws in states that authorize
medical or even recreational use of the drug eventually may make it
easier to use credit cards for such transactions, but a banking ban
on legal pot sellers remains intact for now.
With public policy regarding marijuana rapidly evolving,
20 states and the District of Columbia
now allow marijuana to be used for medicinal purposes, and Colorado
and the state of Washington have legalized its recreational
But nearly all banks and credit card companies, reluctant to run
afoul of federal drug and banking laws that remain on the books,
refuse to do business with even state-licensed sellers of
marijuana. This compels business owners and pot buyers to deal only
in cash, which carries its own risks.
Now, the owners of some state-authorized marijuana dispensaries
are hoping that the new guidance for federal prosecutors, issued
Aug. 29 by U.S. Attorney General Eric Holder, will help remove
banking and credit card roadblocks. In essence, Holder and others
at the Justice Department said they would not enforce federal drug
regulation laws when it comes to marijuana-related transactions in
states that authorize and closely regulate cannabis sales.
No ripple effect
Steve DeAngelo, executive director of Harborside Health Center in
San Jose and Oakland, which calls itself the nation's largest,
not-for-profit medical marijuana dispensary, said he was pleased by
Holder's decision -- but only to a point.
"The DOJ announcement is long overdue, but was nevertheless
greeted with joy and relief by our patients and staff," he said.
"However, our joy is tempered in that the new policy does not
specifically apply to current civil enforcement actions.
"For Harborside, that means we are still facing crippling tax
assessments, seizure of the properties where we are located, and
denial of banking, credit card, security and armored car services,"
DeAngelo said. "We hope that these and other federal efforts to
impede our ability to operate as a legitimate business will also be
ended in the near future."
Well, maybe the not-so-near future.
American Express, for example, told CreditCards.com that it does
not anticipate softening its current ban and will not authorize
such sales, even in the wake of Holder's announcement.
The reason? Despite the change in federal enforcement policy
regarding pot, the federal Controlled Substances Act still outlaws
the production and selling of the substance.
"AmEx has made a decision to not allow card acceptance for
medical marijuana," said Sanette Chao, a spokeswoman for American
Express. "It is our policy to continue to adhere to federal law in
Credit card transaction ban intact
American Express and the banks through which most of us acquire our
credit cards, generally refuse to do business with marijuana
marketers or to authorize credit card transactions that involve
"As of today, Harborside still has no access to credit card or
banking services," DeAngelo said. "However, we are
hopeful that our previous service providers will reconsider
their decision to suspend service, in light of [the] clarification
from the DOJ that those providers will not be subject to federal
U.S. Rep. Ed Perlmutter of Colorado, who has filed a bill called
Marijuana Business Access to Banking Act,
praised Holder's action but said it made passage of the bill even
more important. The bill would authorize banks and credit card
companies to accept legally authorized marijuana transactions.
"We need to address the public safety, crime and lost tax
revenue associated when these legal and regulated businesses are
operating in a cash-only system," he said. "We need to provide
financial institutions certainty they can make their own business
decisions related to legal, financial transactions without fear of
"Currently, under federal banking laws, many legal, regulated
legitimate marijuana businesses -- operating legally according to
state law -- are prevented from maintaining bank accounts and
accessing financial products like any other business, such as
accepting credit cards, depositing revenues or writing checks to
meet payroll or pay taxes," Perlmutter said. "They are forced to
operate as cash-only enterprises, inviting crime such as robbery
and tax evasion -- only adding to the burden of setting up a
legitimate small business."
In the Department of Justice's Aug. 29, 2013, memorandum, entitled
Guidance Regarding Marijuana Enforcement
," Deputy Attorney General James M. Cole told federal prosecutors
that, in states that have authorized marijuana use for medical or
recreational purposes, they should defer to those state laws. No
longer should U.S. attorneys in those states file cases against
individuals or entities that grow, process, sell, buy or possess
relatively small amounts of marijuana, according to the new
"The enactment of state laws that endeavor to authorize
marijuana production, distribution and possession by establishing a
regulatory scheme for these purposes affects [the] traditional
joint federal-state approach to narcotics enforcement," Cole told
the federal prosecutors.
But for this to work and to endure, state and local officials
must closely regulate the transactions, particularly as they relate
to public safety, federal officials said. As the guidance was being
released to the public, Holder called Colorado Gov. John
Hickenlooper and Washington Gov. Jay Inslee to advise them of the
move and to discuss his expectations regarding state-enforced
"The department's guidance in this memorandum rests on its
expectation that states and local governments that have enacted
laws authorizing marijuana-related conduct will implement strong
and effective regulatory and enforcement systems that will address
the threat those state laws could pose to public safety, public
health and other law enforcement interests," Cole told the
At the same time, Cole said, the federal government will
continue to enforce the Controlled Substances Act in a multitude of
other ways, including cases involving the distribution of marijuana
to minors, drugged driving, growing marijuana on public lands and
the transportation of marijuana from states where it is legal under
state law to states where it is not legal.
Groups that favor the decriminalization of marijuana expressed
support for the new federal policy.
"This guidance is one more concrete step towards more sensible
drug policy in this country," said Ezekiel Edwards, director of the
American Civil Liberties Union's Criminal Law Reform Project. "We
support the attorney general's decision not to interfere with
individuals and entities that are complying with state marijuana
laws, thereby respecting states' voter-approved and common-sense
approaches to regulating marijuana."
Erik Altieri, communications director for NORML, a nonprofit
lobbying group that works to reform marijuana laws, said he
expected more states to join the trend toward marijuana
legalization, now that the feds have weighed in anew.
"The public has evolved beyond the simplistic, failed policies
of cannabis prohibition and are seeking pragmatic, regulatory
alternatives," Altieri said." It is encouraging to see that the
federal government no longer intends to stand in their way."
Others said that the last thing this nation needs is more drug
"We can look forward to more drugged driving accidents, more
school dropouts and poorer health outcomes as a new 'big marijuana'
industry targeting kids and minorities emerges to fuel the flame,"
said former U.S. Rep. Patrick Kennedy, co-founder of Project SAM, a
bipartisan group that advocates a middle stance between demonizing
drug use and legalizing drugs.
Eyes turn to Congress
Still, the trend appears clear, and many are hoping that it will
lead to a regularization of individual, low-volume marijuana
purchases -- using a credit card, if the buyer so wishes and
Congress eventually allows.
"We have provided our service providers with the relevant
documents from the DOJ, and are awaiting their decisions on whether
or not to restore service," said Harborside's DeAngelo. "Unless and
until those providers do restore service, Harborside will be forced
to continue operating on an all-cash basis, without the ability to
access banking services -- or even armored cars to securely
transport the cash.
"We are hopeful the situation will change, but at present the
federal government is still trying to tax us out of existence and
seize the properties where we are located, in addition to the
residual effects on our banking and other support services," he
Industry groups said they would redouble their efforts on behalf
of legitimate cannabis operations.
"We are pleased to see the Obama administration will not cause
harm to citizens and states by shutting these businesses down, and
hope this will lead to an expansion of sensible policies related to
marijuana, such as allowing these businesses access to
banking, and taxing them at a fair rate," said Aaron Smith,
executive director of the National Cannabis Industry Association, a
Washington, D.C.-based trade group that represents what it says are
the thousands of firms involved in marijuana production and
Dan Riffle, director of federal policy for the Marijuana Policy
Project, a Washington, D.C.-based group that lobbies on behalf of
reforming marijuana laws, agreed. "The next step is for Congress to
act," he said. "We need to fix our nation's broken marijuana laws
and not just continue to work around them."
Medical marijuana sellers can't take their 420
money to the bank