First Glance: Obama Administration's Marijuana Guidelines 'Cold Comfort' For Banks

"As long as possession of marihuana remains a federal crime, banks won't touch those businesses with a ten foot pole..."

At first glance, what should banks and/or businesses make of the marijuana guidelines recently issued by the Obama administration? That's the questions we put to JD Supra contributors with an expertise in these matters. Here is what we heard back.

Cold Comfort

From Alan S. Kaplinsky, practice leader of law firm Ballard Spahr's Consumer Financial Services Group:

"The guidelines are cold comfort to a bank contemplating an opportunity to enter into a relationship with a marihuana business. As long as possession of marihuana remains a federal crime, banks won't touch those businesses with a ten foot pole, particularly given the attention recently by the federal banking agencies on the need for banks to avoid getting involved with companies engaged in possible unlawful activities ( e.g., tribal payday lending). The guidelines for exercising prosecutorial discretion doesn't change the federal criminal statute. Why in the world would a bank want to roll the dice???"

Ultimately Toothless

From attorney Steven Eichorn of Ifrah Law:

"The new regulations and guidance issued by the DOJ and FinCen are definitely welcome and on the surface appear to be helpful. However, they are ultimately toothless. Simply stated, the new regulations and guidance provide that both agencies will (probably) not enforce the applicable federal statutes against banks for processing marijuana-related accounts. Yet, the regulations and guidance state that they may still enforce the laws, because marijuana sales are still illegal under federal law. (But – to make matters more confusing, the government essentially says - don’t worry too much, because they probably won’t enforce these laws). These wishy-washy “promises” of non-enforcement are extremely unlikely to sway banks from their decision not to permit marijuana-related accounts. Banks are naturally conservative and also have a huge self-interest to be 100% compliant with federal law because of the highly regulated banking industry. Therefore, banks are only likely to permit marijuana-related accounts if there were some form of safe harbor for the banks. However, there is clearly no safe harbor with the recent regulations and guidance.
For instance, the DOJ memo explicitly states: “This memorandum does not alter in any way the Department’s authority to enforce federal law, including federal laws relating to marijuana…evidence that a particular conduct of a person or any entity threatens federal priorities will subject that person or entity to federal enforcement action…”. The FinCen memo also repeats “that the illegal distribution and sale of marijuana is a serious crime…”. In absence of any safe harbor and the still illegal status of marijuana, banks will likely pursue the safe option of refusing to process marijuana-related accounts.

This scenario is quite similar to the recent aftermath in New Jersey when it legalized online gaming for intrastate users. Although New Jersey declared online gaming legal under New Jersey state law, banks generally refused to process online gaming accounts. 

Banks deemed these accounts too risky because they assumed that online gaming for real money is prohibited by federal law. Similarly, the ultimate conclusion of banks considering marijuana-related accounts is likely to refuse to allow such accounts because they are still illegal under federal law and hosting those accounts presents an unwelcome risk for the banks.


[JD Supra's new First Glance series asks experts for their early response to breaking news stories. Stay tuned for additional updates in the series. Looking for insights? Send suggestions to]

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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