On 1 January 2014, the sale of marijuana for recreational purposes was legalised in Colorado and Washington. (Twenty states already permit its sale for medical use, but these two are the first to allow it for fun.) Putting aside the many and various views on legislation of drugs, failed prohibition of substances and so on, the actions of these two states has reignited a legal dilemma in the US. Under federal law, the use, sale, and possession of marijuana is illegal. However, the federal government has announced that if a state wants to pass a law to decriminalise the drug for recreational use they can do so, but they need to have a regulation system in place – and this both Colorado and Washington have done. As put rather succinctly in an article in the Economist: “Because marijuana is more dangerous than chocolate or chips, it needs to be subject to more stringent safety checks than food. As with alcohol, anybody who wants to produce it for sale, or sell it, should be licensed, as they will be in Colorado. It should carry clear labels showing its tetrahydrocannabinol (THC) content, just as cans of beer display their alcoholic strength – consumers should know what they are smoking. Colorado seems to be handling this well: labels are clear, safety rules stringent.”
Rather less clear cut (small drug-related joke there) is the issue of what to do with the money. Under federal law, selling marijuana is illegal, and so banking the proceeds from such trade would be, of course, money laundering – anywhere in the US. Pot shops in Colorado are already reporting difficulties in opening bank accounts, as banks take the view that they’re not worth the risk. Without a banking presence, Colorado’s new pot shops – along with medical marijuana businesses in many states – will find that they have to purchase stock, pay employees and conduct sales entirely in cash, requiring elaborate and expensive security measures and putting them at a high risk of robbery. And, let us not forget, a cash-based business is much harder to monitor for tax purposes… With perhaps this last point uppermost in his mind (although I am curious about why this was not foreseen and sorted before 1 January), US Attorney General Eric Holder announced on 23 January 2014 that his government will soon issue regulations designed to open banking services to state-sanctioned marijuana businesses (both medical and recreational). Adding that new “source of funds” option to the customer take-on form should be fun.