
Legal Marijuana Businesses Should Have Access to Banks, Holder Says - asnyder
http://www.nytimes.com/2014/01/24/us/legal-marijuana-businesses-should-have-access-to-banks-holder-says.html
======
nlh
Why is there still such resistance at the highest levels to legalization /
decriminalization?

Obama and Holder have made it pretty clear (at least personally) that they
don't see marijuana as a risk, and yet when the discussion about removing it
from Schedule 1 status comes around, the answer seems to be "no".

Why is this? Obviously politics, but I'm curious where the big resistance is
coming from. What would happen if Obama just said "You know what, we're taking
it off Schedule 1 status. Done." Who would fight back and why?

~~~
crystaln
There are enormous vested interest in marijuana being illegal.

The biggest may be that most local police departments are funded largely by
the seizure of assets from minor drug offenders and innocents who they can get
away with accusing of drugs.

Other vested interests are the large number of government employees and
private companies who benefit from the drug war, from drug detection to
prisons.

There are also political issues. Marijuana legalization is opposed by many
swing voters, and neither party can afford to lose those. Leaving matters up
to states allows states where the majority favors continued criminal
prosecution of marijuana offenses to do as they wish. This is actually the way
it should be constitutionally.

I'm actually not sure how the federal government has the constitutional
authority to enforce drug laws against the wishes of a state. If anyone can
point me to a precedent, that would be helpful. The federal government has no
authority to enforce laws against most crimes that occur entirely within a
state's borders unless they violate international treaties.

EDIT: It appears the authority was challenged and affirmed in Gonzales v Raich
case, though I think the opinion is in error as it grants the federal
government complete authority to regulate local activity, an opinion which the
Constitution was written to prevent. Congress is limited to the power "to
regulate Commerce with foreign Nations, and among the several States".

[http://en.wikipedia.org/wiki/Gonzales_v._Raich](http://en.wikipedia.org/wiki/Gonzales_v._Raich)

~~~
mschuster91
> unless they violate international treaties

Which they in fact do - there are multiple international treaties on drug
crimes and enforcement.

~~~
crystaln
Feel free to enumerate any that would require the federal government to
enforce marijuana laws. If there were any, I would have expected them to be
mentioned in Gonzales v Raich, but none were.

~~~
mschuster91
I know of the "Single Convention on Narcotic Drugs" and the "United Nations
Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances", but I am no lawyer so I can't say whether these treaties have a
legally binding effect which prevents more relaxed dealing with drugs.

~~~
noptic
For the lazy:
[http://en.wikipedia.org/wiki/Single_Convention_on_Narcotic_D...](http://en.wikipedia.org/wiki/Single_Convention_on_Narcotic_Drugs#Influence_on_domestic_legislation)

------
guelo
And yet Holder refuses to reign in his attorney for Northern California,
Melinda Haag, who has been aggressively raiding and shutting down legal
California dispensaries. She is currently trying to seize the property of a
large Oakland dispensary prompting Oakland city government to intervene to try
to prevent it. She refuses to drop the prosecution even after everything that
has happened in Colorado and Washington and the statements by Obama and
Holder.

~~~
ewoodrich
The "Cole Memo",[1] from DAG James Cole, is the most recent directive on
prosecution of marijuana distribution in states that have legalized it either
for recreational or medical use. It permits weighing the likelihood of illegal
trafficking on a number of factors, including size and for profit nature
(although it states that this cannot be the only basis for prosecution).

Even so, US Attorneys have a great amount of autonomy, and Holder directly
"reigning in" Haag could be seen as political interference (it is still a
violation of federal law, after all). The US Attorney firing scandal in the
Bush Administration was an example of backlash for interfering with this
autonomy. [2]

[1]
[http://www.justice.gov/opa/pr/2013/August/13-opa-974.html](http://www.justice.gov/opa/pr/2013/August/13-opa-974.html)

[2]
[http://en.m.wikipedia.org/wiki/Dismissal_of_U.S._attorneys_c...](http://en.m.wikipedia.org/wiki/Dismissal_of_U.S._attorneys_controversy)

~~~
guelo
Her office said they'll continue the crackdown even after the Cole memo[1].
Makes you wonder whats really going on with these guidelines that can be
ignored at will.

The Bush firing scandal was purely political, it was done to protect
Republicans from investigations. That is nowhere in the same league as
requesting that prosecution guidelines be followed. And anyway, even in the
firing scandal no one got into trouble over it. I don't buy the idea that
Holder or Obama are powerless to stop her if they wanted to.

[http://www.eastbayexpress.com/LegalizationNation/archives/20...](http://www.eastbayexpress.com/LegalizationNation/archives/2013/08/30/us-
attorney-melinda-haag-to-continue-crackdown-despite-white-house-directive)

------
reuven
I don't live in the US (although I'm a citizen), I don't smoke pot, and never
have. But I find this to be a completely fascinating set of circumstances, and
one which is leading to confusion and a lack of standardized rule of law.

You basically have federal US laws outlawing anything having to do with
marijuana, and many people serving jail time for having possessed, grown, or
distributed it.

You also have states that have said it is completely legal to possess, grow,
and distribute it. Right there, that strikes me as a weird combination: Don't
federal laws trump state ones? (And wasn't this sort of a central part of the
Civil War, that states can't just make up their own laws that contradict
federal ones?)

The federal government is now saying, "Don't worry about those laws on our
books. We won't prosecute you." They're even saying, in this article, that
they won't prosecute banks. (Well, after the regulations are clarified.)

But that strikes me as an extremely inconsistent message, and one which can
change at any point in time. If everyone believes Holder, but then Holder
changes his mind a year from now... well, then there's nothing you can do,
because he is doing nothing more than enforcing the laws -- laws that have
been around for many years, and didn't come as a surprise to anyone.

Moreover, what happens when another president or attorney general comes into
office, and decides to enforce these laws to the max? You'll have banks,
growers, and others suddenly prosecuted for federal crimes just because
someone else came into office.

I think that these problems are likely to continue, until and unless marijuana
use is decriminalized at the federal level. Which, given the state of US
politics right now, doesn't strike me as very likely.

~~~
Daniel_Newby
> You basically have federal US laws outlawing anything having to do with
> marijuana, ...

On the theory that growing hemp in your garden is "interstate commerce". The
laws are unconstitutional. It's all just vote whoring by the princes of
Washington, D.C.

Decriminilazation is inevitable. It will take the form of a constitutional
amendment, just like the one that stripped the feds of control of alcoholic
beverages.

~~~
jpatokal
Unfortunately there's Supreme Court precedent that growing wheat in your own
backyard for your own use is "interstate commerce". Why? Because by growing
your own wheat, you're not buying somebody else's wheat, and _that_ affects
interstate commerce. _boggle_

[https://en.wikipedia.org/wiki/Wickard_v._Filburn](https://en.wikipedia.org/wiki/Wickard_v._Filburn)

~~~
thaumasiotes
It seems difficult to apply that precedent to marijuana, as commerce in
marijuana is banned (so the "you'd be buying it from someone else" step never
kicks in).

~~~
ceejayoz
I think it was more of an example of the absurd legal gymnastics they're able
to do to justify the desired conclusion of a case.

------
pstuart
This, and Obama's recent admission that cannabis is not dangerous is a hint
from the administration that the Feds will cave sooner rather than later (in
political time, that is). Once enough states go legal they will have no choice
in the matter.

~~~
csense
> Once enough states go legal [the federal government] will have no choice in
> the matter.

I beg to differ. If the federal government doesn't like what's going on in
these states, they can prosecute individuals and businesses involved in the
marijuana business on the federal level. Even if successful, defendants would
face months or years of uncertainty and hefty legal bills. Moreover, the
prospect of success looks dim: The Supreme Court has already ruled that the
infamous universal loophole in the Constitution known as the interstate
commerce clause applies even to growing your own food on your own property for
your own consumption [1] and that this ruling applies to marijuana even for
medicinal purposes [2].

EDIT: Given that the Supreme Court is at least theoretically bound by
precedent, and given that precedent apparently allows federal policy to trump
state policy in this area even for strictly intra-state activities, the court
isn't the right place to address this anyway. If the President is amenable to
the idea, having the executive branch proclaim a policy of non-enforcement of
federal marijuana statutes in states that have legalized marijuana is
certainly a good place to start -- but the next President could unmake such a
policy just as easily as this President can make it.

Legislation would be a more permanent fix. The most permanent fix of all would
be a Constitutional amendment which altered the balance of power between state
and federal governments, perhaps explicitly narrowing the scope of the
commerce clause. Some of the reasons why this might desirable are given in the
O'Connor / Rehnquist dissent [2].

Unfortunately, due to historical events in the US, the notion that the federal
government has too much power and states have too little is inexorably tied in
political rhetoric to slavery, repression of African-Americans, and Southern
right-wing conservatives. Which means that for the foreseeable future, the
balance of power between state and federal governments will continue to tilt
toward the latter.

[1]
[http://en.wikipedia.org/wiki/Wickard_v._Filburn](http://en.wikipedia.org/wiki/Wickard_v._Filburn)

[2]
[http://en.wikipedia.org/wiki/Gonzales_v._Raich](http://en.wikipedia.org/wiki/Gonzales_v._Raich)

~~~
mtgx
How does that work exactly? If federal laws are above state laws, then what's
the point of state laws?

~~~
csense
Originally, the United States consisted of thirteen British colonies that saw
themselves as culturally similar neighboring individual countries in a
military alliance against their faraway British overlords.

After the war, the former colonies decided that sticking together militarily
and speaking with one voice on foreign policy had worked out pretty well for
them -- they'd fought a war against the world's number one superpower and won
-- so they ought to continue to do so, and the new government ought to set up
uniform rules for the way states trade with each other, and establish a single
place to register scientific inventions, etc. Sort of like the European Union
today, or maybe the European Community that preceded it.

The states had just thrown off the shackles of one overlord and weren't about
to put themselves under another. After these concerns resulted in an initial
agreement so weak as to border on totally ineffective [1], their diplomats
tried again [2] [3], and the states agreed but quickly demanded more
limitations on federal power [4].

The ideological divide between states that allowed slavery and states that did
not was a crisis on slow boil for the better part of the next century,
resulting in various political compromises [5] [6] but eventually leading to a
major civil war [7].

After the war was won by the side that favored a stronger national government,
one of the side effects of the event was setting a precedent of the federal
government imposing its policies on unwilling states at gunpoint [8]. (It's
not a typo in that reference when it notes the _Republicans_ pushed for
radical expansions of African-American rights; both parties basically
completely switched sides with respect to racial issues after World War 2
[9]).

The sense of national unity was strengthened through the outcome of the war,
increased interstate commerce due to the inventions of the Industrial
Revolution, and the crises of the Great Depression and the world wars. All of
these events gave the federal government reasons to expand its powers [10]
[11] [12], in ways which seemed like good ideas at the time but ended up
resulting in a much more powerful federal government, and much weaker state
governments, than anyone had envisioned.

[1]
[http://en.wikipedia.org/wiki/Articles_of_confederation](http://en.wikipedia.org/wiki/Articles_of_confederation)

[2]
[http://en.wikipedia.org/wiki/Philadelphia_Convention](http://en.wikipedia.org/wiki/Philadelphia_Convention)

[3]
[http://en.wikipedia.org/wiki/United_States_Constitution](http://en.wikipedia.org/wiki/United_States_Constitution)

[4]
[http://en.wikipedia.org/wiki/United_States_Bill_of_Rights](http://en.wikipedia.org/wiki/United_States_Bill_of_Rights)

[5]
[http://en.wikipedia.org/wiki/Three_fifths_compromise](http://en.wikipedia.org/wiki/Three_fifths_compromise)

[6]
[http://en.wikipedia.org/wiki/Missouri_compromise](http://en.wikipedia.org/wiki/Missouri_compromise)

[7]
[http://en.wikipedia.org/wiki/American_civil_war](http://en.wikipedia.org/wiki/American_civil_war)

[8]
[http://en.wikipedia.org/wiki/American_civil_war#Reconstructi...](http://en.wikipedia.org/wiki/American_civil_war#Reconstruction)

[9]
[http://en.wikipedia.org/wiki/Southern_strategy](http://en.wikipedia.org/wiki/Southern_strategy)

[10]
[http://en.wikipedia.org/wiki/Incorporation_of_the_Bill_of_Ri...](http://en.wikipedia.org/wiki/Incorporation_of_the_Bill_of_Rights)

[11]
[http://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_Unit...](http://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Constitution)

[12]
[http://en.wikipedia.org/wiki/New_deal](http://en.wikipedia.org/wiki/New_deal)

~~~
Daniel_Newby
Your comment omits one thing without which the reader cannot understand modern
federal politics. At the same time automation was eliminating jobs at the
highest rate in history, the federal government ran the money supply into the
ground. This was the Great Depression.

When FDR became president, he took economic desperation as a blank check to do
_anything_ to fix the Great Depression. The federal government explicitly had
no power over local manufacturing and employment, so they created the power by
reinterpreting anything that hypothetically might affect later interstate
commerce as if it _were_ interstate commerce. So birthing too many piglets was
the same thing as selling too much smoked pork across a state line, and the
federal cops would come to your farm and correct it by killing the unlawful
piglets.

This should probably have resulted in the rape of Washington, D.C., but at the
time Americans were starving in Bangladesh-style tent cities and were willing
to put up with a lot. Also local governments were flying the Communist flag
and high federal officials were openly espousing Stalinism, so an
unconventional jobs program _that worked_ raised few eyebrows.

~~~
csense
Actually I covered all that. "All of these events gave the federal government
reasons to expand its powers," where "all of these events" includes "the
crises of the Great Depression and the world wars."

I was going to gently explain to you something along the lines of "tone down
the rhetoric if you want the people here to take your political views
seriously," but then I saw you have more karma than me, so I guess you know
what you're doing.

~~~
Daniel_Newby
What you wrote was the public school history book version. X gave Y reasons to
do Z. The details of what happened are important. The Great Depression was not
aww shucks bad luck, it was a self-inflicted wound. Many of the fixes tried
were also self-inflicted wounds.

The rhetoric is toned down. The present political situation is unstable, and
unstable situations are ripe for demagogues to take power. I fear that the
expanded interstate commerce clause is our Treaty of Versailles. If we do not
build a country to be proud of, someone will slap a few runes and occult
symbols on the Flag and say "Here is something to be proud of." And the
crematoria will run night and day.

~~~
RichardHead
Here's an elaborate and well-defined explanation of the new deal and the
changes it wrought on the American political system:
[http://mises.org/daily/2726](http://mises.org/daily/2726)

------
erikpukinskis
Huge amounts of cash not being deposited surely worries banks' shareholders
too.

------
kolbe
Given how the US has treated JP Morgan in the past couple years, it would be
stupid of any bank to partake in any illegal activity simply based on this:

"The rules are not expected to give banks a green light to accept deposits and
provide other services, but would tell prosecutors not to prioritize cases
involving legal marijuana businesses that use banks."

------
dr_doom
Our governor in Texas recently said he is working toward decriminalization.
Change is coming.

[http://www.mysanantonio.com/news/local/article/Gov-Rick-
Perr...](http://www.mysanantonio.com/news/local/article/Gov-Rick-Perry-for-
decriminalization-of-pot-5168667.php)

------
milesokeefe
It makes sense that banks don't want a part in it until it's legal on the
federal legal.

------
nmodu
One key component that neither the article nor the commenters have explicitly
mentioned is the threat that cartels pose to the the legal marijuana business.

Since legalization could potentially eat away at a sizable chunk of a cartel's
marijuana revenue stream [1], dispensaries already run the risk of being
targeted by cartels/gangs. The fact that these dispensaries are forced to hold
large cash balances in their back rooms makes them even more appealing as a
potential target.

[1] [http://www.cbsnews.com/news/study-us-marijuana-
legalization-...](http://www.cbsnews.com/news/study-us-marijuana-legalization-
would-hurt-mexican-cartels/)

------
ergoproxy
Illegal drug businesses already have access to Banks. Quoting from another
NYTimes article (January 2, 2013): "LAST month, HSBC admitted in court
pleadings that it had allowed big Mexican and Colombian drug cartels to
launder at least $881 million." Source:
[http://www.nytimes.com/2013/01/03/opinion/how-bankers-
help-d...](http://www.nytimes.com/2013/01/03/opinion/how-bankers-help-drug-
traffickers-and-terrorists.html)

------
josefresco
"To try to keep the banks from catching on, he said, he even sprays his cash
with Febreze to disguise the scent of marijuana."

Wow, somewhere there's a storage locker (probably more) with a stack of cash
just like we all saw on Breaking Bad. Except this cash was made "legally" and
yet the owners still have to operate like an illegal enterprise just to pay
bills and employees.

------
iamwithnail
Absolutely gobsmacked that they _don 't_ have access to banks. Incredible
scenes.

~~~
icebraining
[http://www.npr.org/blogs/money/2012/12/04/166514067/episode-...](http://www.npr.org/blogs/money/2012/12/04/166514067/episode-420-the-
legal-marijuana-business)

------
spiritplumber
Anything that makes the banks less relevant is good in my book.

------
excellence24
Be your own bank and use bitcoin in the meantime

~~~
Pitarou
I would if I could, but I'm in no position to force my suppliers and customers
to use BTC.

~~~
mschuster91
You can at least store a part of your money in BTC, so you don't have the cash
lying around somewhere unsafe.

~~~
dagw
Honest question. Where would you go if you regularly wanted to buy say
$5000-10000 worth of bitcoins using cash?

(or for that matter wanted to quickly convert $5000 worth of bitcoins into
cash)

~~~
mschuster91
LocalBitcoins and non-US-based bitcoin exchanges (funding via e.g. Western
Union) for the cash-in.

The problem remains the cash-out, but for smaller quantities one can use
Localbitcoins again.

~~~
dagw
The buy sell spread on LocalBitcoins seems to be in the region of
$150-200/bitcoin for cash deals. That doesn't seem too attractive for using
bitcoin as an alternative to a checking account.

