Last Tuesday Arkansans approved Amendment 6 to the Arkansas Constitution. While Arkansas may have given the green light to the medical marijuana industry, the sale and use of marijuana still is illegal at the federal level. In late June 2011, the U.S. Department of Justice issued a memo reiterating the consequences of those individuals caught cultivating, selling or distributing marijuana. The memo also went on to include other parties who “knowingly facilitate such activities” as targets of prosecution. The exact language as stated in the DOJ memo reads:
“Persons who are in the business of cultivating, selling or distributing marijuana, and those who knowingly facilitate such activities, are in violation of the Controlled Substances Act, regardless of state law. Consistent with resource constraints and the discretion you may exercise in your district, such persons are subject to federal enforcement action, including potential prosecution. State laws or local ordinances are not a defense to civil or criminal enforcement of federal law with respect to such conduct, including enforcement of the CSA. Those who engage in transactions involving the proceeds of such activity may also be in violation of federal laundering statutes and other federal financial laws.”
A few banks in other states that had previously legalized marijuana had banked medical marijuana businesses prior to directives from federal banking regulators (Federal Reserve System, Federal Deposit Insurance Corporation, Comptroller of the Currency) consistent with the DOJ letter. Since that action by bank regulators, we know of no bank continuing to bank marijuana businesses knowingly.
The only way ABA knows to deal with this is for the federal government to amend the Controlled Substances Act to create an exception (e.g., per state law and for limited amounts). That may address legal issues for other aspects of marijuana use, but it may not be sufficient for the banking aspect. For financial institutions to handle such transactions, further amendments may be needed to the USA Patriot Act, Bank Secrecy Act and other federal statutes.