Medical Marijuana

Obama administration offers institutions new guidance in an effort to bring dispensaries into the mainstream.

By Timothy M. Phelps and Jim Puzzanghera
February 14, 2014, 6:09 p.m.

WASHINGTON — The Obama administration, taking the first regulatory step to accommodate the country’s growing state-approved marijuana businesses, issued guidelines Friday designed to bring dispensaries into the banking system and end their risky reliance on stashing large amounts of cash.

The step was a cautious one, reflecting conflicting pressures on the administration.

On one side, many states now allow the sale of marijuana for medical or recreational use. Atty. Gen. Eric H. Holder Jr. said last month that law enforcement agencies were increasingly concerned about marijuana sellers who are forced to deal in cash because the banks’ unwillingness to deal with them prevents them from using credit cards.

At the same time, federal law still classifies marijuana as illegal, and many in law enforcement agencies have privately criticized the administration’s actions to rein in prosecutions.

The move drew praise from marijuana advocates but seemed likely to fall short of the reassurance banks have sought that they will be free from the risk of prosecution if they deal with marijuana-related transactions.

The effect on California’s dispensaries is even more in doubt. The new guidelines say “a financial institution may reasonably rely on the accuracy of information provided by state licensing authorities.” Although some California cities and counties regulate the stores, the state has passed no laws to control them.

That uncertainty could increase pressure on the state Legislature to regulate medical marijuana dispensaries, but a bill to create a comprehensive statewide system has had difficulty getting any traction in Sacramento.

Robert Jacob, executive director of the Peace in Medicine dispensary in Sebastopol, Calif., was still optimistic about the federal move.

“I think this is an important first step and a sign that the federal government agrees that responsible regulation is better than turning a blind eye,” he said.

Jacob, who is also the city’s mayor, said he had approached every bank in Sonoma County to open an account. Two banks agreed, but both later sent him notices saying they were going to have to shut down the accounts.

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