Banks worry about drug crimes despite legalization of marijuana

Marijuana has been legalized in two American states, but banks throughout the nation say they are struggling to define their role in the new business model. The banks, some of which are also located in North Carolina, are facing potential business consequences if they open accounts for marijuana-based companies. Even though those marijuana businesses are not committing drug crimes according to state law, they are still violating federal rules.

Overall, banking has been a major impediment in the cannabis industry, which had relied on ferreting away large amounts of cash. Business owners who are dodging potential federal drug charges often show up with tens of thousands in cash to pay business taxes. For those cannabis professionals, the days of cash-based business cannot be over soon enough.

A legal reprieve would allow banks to avoid prosecution if they choose to open accounts for marijuana businesses. New guidance from the federal government shows that banks could still be prosecuted for money laundering or racketeering if they do business with professionals in the pot industry. In some cases, business owners who are not even facing federal drug charges have had their accounts frozen, seemingly at random.

Banks have also been enlisted to provide some measure of internal policing for the marijuana industry; they are encouraged to file reports that could lead to drug charges and other consequences for account holders. So-called “red flags” include out-of-state cash deposits or even unexpected increases in revenue. So far, many banks are patently refusing the get involved with the pot business until federal regulations against the drug have been lifted.

Criminal defendants in drug cases should know that potentially incriminating evidence can come from their North Carolina banks. Even in states with legalized recreational marijuana, banks are encouraged to provide evidence against their clients if even a minor violation occurs. Criminal defense attorneys in North Carolina may be able to provide additional information about the role of banks in a potential criminal conviction for drug charges.

Source: WTHR, “Federal guidance on pot business leaves banks wary” Gene Johnson, Feb. 16, 2014