Monday, February 17, 2014

Banks slow to work with legal marijuana retailers even after DOJ loosens "know your customer" rules

Larger banks, such as Wells Fargo (according to a CNN report this morning) still are reluctant to allow “legal recreational marijuana” dealers to have accounts with them, because they fear downstream that they will be still held responsible if the businesses do illegal things unseen.

Smaller community banks are more likely to work with marijuana dealers in states (Colorado) where limited recreational use has become legal.

This report follows a recent DOJ decision not to pursue banks who do business with “legal” marijuana retail or grower operations.  The rules do insist that the businesses not cross state lines, and not connect with organized drug cartels.  Evan Perez reported on this for CNN Feb. 14, link

The issue has always been a bone for libertarians who say that “know your customer” laws have a chilling effect on business.  A general extension of this principle would be the Section 230 downstream liability immunity for Internet service hosts, which many politicians (especially at the state level) want to weaken.  

Update:  Feb 24

The Washington Times offers a commentary by Robert Charles,  "Just say no to drug money", showing the practical concerns for banks,  

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