The Obama administration released instructions in February for bankers who want to work with marijuana entrepreneurs. But with the financial industry saying the plan doesn’t go far enough, it’s not clear it will have the desired results.

The guidance was issued Feb. 14 by the Justice and Treasury departments. The instructions are designed to make banks feel secure working with marijuana businesses that are legal under state law,weed and money whether medical or recreational.

Weed has been fully legalized in two states, Washington and Colorado. Another 19 allow medical pot.

But the drug remains illegal under federal law, and that isn’t likely to change anytime soon. Among many other things, this means banks can’t legally do business with anyone they suspect is violating federal law.

Pot purveyors use a wide array of tricks to hide their money, shifting it between personal and business accounts, making only small transactions, storing cash carefully before depositing it so it doesn’t smell of marijuana. But at the end of the day, most cultivators, processors and sellers are left to deal almost exclusively in cash.

This creates a new set of problems. Storing and carrying large sums of cash is extremely dangerous. Dispensary staffers often develop elaborate anti-robbery tactics such as switching cars, darting through heavy traffic and using decoy drivers.

To make matters worse, the DEA has made it much harder for businesses to hire security. For all intents and purposes, many cannabis workers are sitting ducks.

An all-cash system also makes it harder for the government to collect taxes, since there are no electronic or paper records tracing the origin of the cash. Business people simply show up at the tax office with thousands of dollars in bundles and pay their bills.

Pot purveyors and bankers have long waited for word from the feds. But even before it came, the banking industry made it clear guidelines wouldn’t be enough. They need a crystal clear assurance they can’t be touched. The only thing that will convince most of them is federal legalization.

buds and money

“After a series of red lights, we expected this guidance to be a yellow one,” said Don Childears, CEO of the Colorado Bankers Association. “This isn’t close to that. At best, this amounts to ‘serve these customers at your own risk’ and it emphasizes all of the risks. This light is red.”

The American Bankers Association said its members wouldn’t accept the guidelines until weed is legalized under federal law. The odds of that happening in the next few years are about as good as the odds of someone dying of a real marijuana overdose: nil.

“Guidance or regulation doesn’t alter the underlying challenge for banks,” the group said in a statement. “As it stands, possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution and assorted sanctions.”

That doesn’t mean no banker will follow the new rules. Some already knowingly look the other way while their clients conduct cannabis business. But it may take a while for bankers to realize there is a choice between all and nothing, and that it is in their interest to accept it.

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