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Mnuchin: Treasury is reviewing cannabis policies

Last month, the Trump administration’s Justice Department rescinded the federal guidance that allowed legal marijuana to grow into a multibillion dollar industry. For the time being, however, cannabis companies will still be able to hold a bank account.

In testimony Tuesday before the House Financial Services Committee, Treasury Secretary Steve Mnuchin said his office has been reviewing the 2014 Financial Crimes Enforcement Network (“FinCEN”) guidance that enabled federally insured banks and credit unions to serve cannabis companies in states that have legalized it.

cannabisMarijuana is now legal either for adult recreational or medical use in the majority of states, but remains classified by the federal government as an illegal Schedule 1 drug, in the same class as heroin. Marijuana companies still have a hard time getting basic banking services, although increasingly credit unions and community banks are doing business with pot companies under the FinCen guidance. As of September, 400 credit unions and banks were serving cannabis companies, FinCEN reported.

The banking issue is of interest to wealthy equity investors and hard money lenders that have typically stepped up to bankroll the real estate purchases of marijuana startups.

On Jan. 4, U.S. Attorney General Jeff Sessions rescinded the Cole Memo, a 2013 document that spelled out how the federal law would be enforced in states with legal marijuana. That signaled that Justice Department could take a harder line.

Mnuchin indicated that the FinCen guidance, which provided a framework for a banks to provide services to the legal marijuana industry, will still apply until Treasury comes up with an alternative. Mnuchin said he did not “participate” in the attorney general’s decision to rescind the Cole memo, but was now consulting with the Department of Justice.

“I can confirm to you that we are reviewing it (FinCEN), but I can also assure you that we don’t want bags of cash,” Mnuchin said, responding to a question from Congressman Brad Sherman, D-California. “We want to make sure we can collect our necessary taxes and other things in other than cash.”

Sherman told Mnuchin that if Treasury were to rescind FinCen guidance, “then that would really make it better for armed robbers in my community.”

Mnuchin was also questioned by Reps. Ed Perlmutter, D-Colorado, and Denny Heck, D-Washington, who have introduced the Secure and Fair Enforcement Banking Act [the SAFE Banking Act]. The bill would provide legal protections to banks providing financial services to marijuana companies. Colorado and Washington were the first two states to legalize marijuana for recreational use.

“I can see no way where you avoid bags of cash if you back down on FinCEN guidance,” Heck said. “Do you have something in mind that would enable us to prevent that very perilous circumstance to public safety? Of having bags of cash?”

Mnuchin replied that Treasury “specifically hasn’t taken it [the guidance] down.”

“We are looking at what Justice has done and, as I said, we are sensitive to the issue of dealing with the public safety issue, and also making sure the IRS and others have a way of collecting taxes without taking in cash.” 


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