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Banks Get Skittish on Pot as Feds Signal Crackdown
(BNA) -- Banks may get more skittish about taking on marijuana-related businesses as customers after the White House signaled greater federal oversight of the industry.
Press Secretary Sean Spicer Feb. 23 said there will be “greater enforcement” of recreational marijuana, which is legal in eight states and Washington, D.C.
“Until it's made clear what the Administration's statement means, it's likely that banks already serving the industry will continue doing so, albeit apprehensively,” Jenifer Waller, senior vice president of the Colorado Bankers Association in Denver, told Bloomberg BNA Feb. 23. “Those banks that are not working with the marijuana industry will likely be ushered toward increased caution and hesitance.”
Marijuana is a Schedule 1 drug under the federal Controlled Substance Act, which places it among the most tightly regulated substances deemed as having “no currently accepted medical use.”
Recreational ‘Very, Very Different’
Spicer said the Trump administration views medical marijuana as bringing “comfort” to people facing “pain and suffering,” especially from terminal diseases. But recreational marijuana — the use of the drug by adults 21 and over — is a “very, very different subject,” Spicer said.
Dramatic changes in federal government enforcement policies “could force marijuana businesses to become more cash-dependent, which presents real public safety concerns, Mark Bolton, marijuana advisor to Colorado Gov. John Hickenlooper (D), said Feb. 24.
Colorado, the first state to legalize recreational marijuana, wants to establish a collaborative relationship with the federal government “to continue building on a regulatory system that protects public safety and other law enforcement interests,” Bolton told Bloomberg BNA in an e-mail Feb. 24.
More Risk for Banks?
Spicer's comments are “not all that shocking” given the distinction President Donald Trump made between medical and recreational marijuana use during the presidential election campaign, according to Zane A. Gilmer of Stinson Leonard Street in Greenwood Village, Colo. Gilmer advises clients on engaging in business with state-licensed marijuana businesses.
Banks might consider they are taking on more risk by having recreational marijuana businesses as customers than if they provide services only to medical marijuana businesses, he told Bloomberg BNA Feb. 23.
“Recreational has a higher perceived risk of enforcement,” he said. Spicer's remarks “could be a further wrench into the recreational side of the industry. And if you're on the medical marijuana side, you have to ask yourself, ‘Is this the first shoe, and is the other shoe going to drop?’ They're both illegal under federal law.”
Rep. Ed Perlmutter (D-Colo.) said the Spicer statement demonstrates the Trump administration “continues to be ambiguous about how they intend to regulate medical and recreational marijuana.” In Colorado, medical marijuana and adult-use marijuana are inextricably linked and difficult to separate, he said Feb. 24 in an e-mail to Bloomberg BNA.Content originally published by Bloomberg on February 24, 2017.