Marijuana money in the mattress: banks remain leery of deposits from cannabusinesses.

• Author: Sullum, Jacob

Last fall the Washington State Liquor Control Board announced that Bank of America had agreed to accept revenue from the license fees paid by marijuana growers, processors, and retailers. Bank of America also keeps the state's tax revenue, which includes money from levies on marijuana. But Bank of America, like most financial institutions, does not accept deposits directly from marijuana businesses, which under federal law still qualify as criminal enterprises.

U.S. Attorney General Eric Holder has repeatedly expressed concern about that situation, which also affects state-licensed pot stores in Colorado. "You don't want just huge amounts of cash in these places," Holder said during an appearance at the University of Virginia in January. "They want to be able to use the banking system. There's a public safety component to this.... 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." But the solution that Holder offered fell far short of the assurances that banks seek.

In a February 14 memo, Deputy Attorney General James Cole said U.S. attorneys should consider "federal enforcement priorities" in deciding whether to prosecute banks that accept pot proceeds for money laundering or other financial crimes. The memo extended the guidance Cole had offered in August regarding prosecution of state-licensed marijuana suppliers. But like the earlier memo, this one did not make any promises. The closest it came was this: "If a financial institution or individual offers services to a marijuana-related business whose activities do not implicate any of the eight priority factors, prosecution for these offenses may not be appropriate." Also like Cole's August memo, this one closed with a caveat that was not exactly reassuring: "Nothing herein precludes investigation or prosecution, even in the absence of any one of the factors listed above, in particular circumstances where investigation and prosecution otherwise serves an important federal interest."

The DO) memo on financial crimes was accompanied by a similarly alarming memo from the Treasury Department's Financial Crimes Enforcement Network (FinCEN). FinCEN said banks must file "suspicious activity reports" (SARs) for all marijuana businesses. But it drew a distinction between marijuana businesses that violate state law or implicate one of the Justice Department's...