Marijuana Money? U.S. House Says You Can Take it to the Bank

By Thompson Wall

The U.S. House of Representatives passed a measure Wednesday that bars treasury and security regulators from penalizing banks for working with legal marijuana businesses. The bill would prevent marijuana businesses from being forced to operate as cash-only.

The House passed the “Heck amendment” to the House Resolution 5106 spending bill by a vote of 231-192. The amendment prevents the Securities and Exchange Commission and Treasury Department from spending money to penalize banks or other financial institutions that provide financial services to legitimate recreational and medical marijuana businesses operating in states where the drug has been legalized.

Washington and Colorado are currently the only two states where marijuana has been legalized for medical and recreational use. Twenty states, including Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington as well as the District of Columbia, approve and regulate the use of medical marijuana.

The House also voted 236-186 to reject an amendment sponsored by Rep. John Fleming, R-Louisiana, that would have blocked the U.S. Treasury Department from implementing guidance it issued in February that told banks how to deal with marijuana-related businesses without skirting federal money-laundering laws.

In May, the House passed an amendment that prohibits the Drug Enforcement Administration from undermining state medical laws and passed two amendments prohibiting the DEA from interfering with state marijuana laws.

"It is not fair to small businesses and employees in Colorado, and in the 33 other states and District of Columbia, where some form of marijuana is legal or decriminalized, to be forced out of the banking system and discriminated against by the federal government," said H.R. 5106 co-sponsor Rep. Ed Perlmutter (D-Co.) in a statement.

The Heck amendment, named for sponsor Rep. Danny Heck (D-Wa.), aims to provide greater certainty for financial institutions that have shown caution when working with marijuana businesses due to uncertainty surrounding state and federal laws. Though the bill is a step in the right direction for marijuana groups, some state industry groups worry that state-licensed cannabis businesses will have to continue paying their federal income taxes in cash, the Denver Post reports.

"They are operating just in cash, which creates its own potential for crime, robbery, assault and battery," Perlmutter said. "You cannot track the money. There is skimming and tax evasion. So the guidance by the Justice Department and the guidance by the Treasury Department is to bring this out into the open."

The federal government continues to classify marijuana as a Schedule 1 drug, under the Controlled Substance Act passed by the Congress in 1970. The Drug Enforcement Agency (DEA) regards Schedule 1 drugs as dangerous substances with no recognized medical use and a high potential for abuse, such as heroin, LSD and ecstasy. The amendment serves to give banks and financial institutions doing business with medical and recreational marijuana dispensaries peace of mind and greater certainty they won’t be penalized for doing so.

Prior to the amendment’s passage, the White House issued a statement Monday "strongly opposing" the passage of H.R. 5016, a House spending bill passed in May that, among other things, would block funding for Washington, D.C.'s recently passed weed decriminalization bill.