Refresh us on how your 2013 memorandum came about. This is an abridged version of Cole’s comments. The four-page 2013 Cole Memorandum, written in response to the legalization of recreational marijuana in Colorado and Washington in 2012, listed eight priorities for federal law enforcement, such as preventing sales to minors and organized-crime involvement-and recommended that federal prosecutors had better things to do than go after states and cannabis businesses who weren’t violating those rules.Ĭole, now a partner at the Sidley Austin LLP corporate-law firm in Washington, spoke publicly on the future of cannabis law and federal enforcement for the first time since leaving the Justice Department May 25, when he was a panelist at the New York City Bar Association’s event, “The Trump Administration and Drug Policy.” Paul DeRienzo, who hosts “TrumpWatch” on WBAI-FM, moderated the panel. The first, written in 2011 (a year after he joined the department), stated that targeting seriously ill patients and their individual caregivers was “not an efficient use of federal resources.” Federal vs.James Cole, a deputy attorney general in the Obama administration, is renowned in the cannabis world for writing the two short memoranda that so far have spared legal marijuana states from federal drug-law enforcement.Subscribe to this blog Your website url Recent Updates Let’s take them in reverse order.Ĭontinue Reading Banking Marijuana Related Business: Are We There Yet? The Week in Weed: February 23, 2018 Since the publication of the FinCEN statistics, much has happened to banking related to the marijuana industry-some of it good, some bad, and some ugly. For many businesses that touch the plant, this makes profit and loss statements questionable, taxing authorities nervous, and potential investors dubious about valuations.

However, the vast majority of business in the industry is conducted in cash. According to FinCEN, in 2017 there were over 300 financial institutions providing some form of banking services to MRBs. While most banks thought the risks far outweighed the benefits of having MRB customers, some financial institutions, mostly local banks and credit unions, saw in the FinCEN guidelines an opportunity and quietly began offering depositary services to MRBs. (For a more complete analysis of the laws related to banking MRBs see our blog post here.) The FinCEN guidelines called for fairly intensive, ongoing and expensive due diligence of any MRB customers, to the point where the risk/reward ratio for banks became inverted-high risk (jail, loss of banking license), low reward (low profit margins). Why would any bank risk prosecution by banking MRBs? In 2014, following the issuance of the Cole Memorandum, the Justice Department and the Department of the Treasury Financial Crimes Enforcement Network (FinCEN) issued non-binding guidance on how financial institutions could serve MRBs.

Because banks face the risk of prosecution for money laundering and aiding and abetting in drug trafficking, most banks will not bank marijuana-related businesses (MRBs). The biggest impediment to explosive growth in the marijuana industry is lack of access to banking and robust financial services.

Cole memoranda