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Holder: Feds to set rules for banks and pot money

The Obama administration will soon announce regulations to make it easier for banks to do business with legal marijuana sellers, Attorney General Eric Holder said Thursday.

"You don’t want just huge amounts of cash in these places. They want to be able to use the banking system," Holder said during an appearance at the University of Virginia's Miller Center. "There’s a public safety component to this. Huge amounts of cash—substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited is something that would worry me, just from a law enforcement perspective."

While Holder spoke twice of new "regulations" that were being prepared, a Justice Department spokesman said later that the attorney general was referring to legal "guidance" for prosecutors and federal law enforcement. Such a legal memo wouldn't be enforceable in court and would amount to less than the kind of clear safe harbor many banks say they would want before accepting money from pot businesses.

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The federal banking accommodation, being worked out jointly by the Justice and the Treasury departments, comes in the wake of decisions by voters in Colorado and Washington state to legalize the sale and possession of pot. The moves have created legal tensions, since marijuana remains illegal under federal law. One particular problem has been the refusal of banks to deal with pot-related businesses out of fears they will be accused of violating money laundering laws.

"We’re in the process now of working with our colleagues at the Treasury Department to come up with regulations that will deal with this issue," Holder said. He added that the new rules were likely to emerge "very soon" and were not intended to amount to a blessing of marijuana by the federal government. "It is an attempt to deal with a reality that exists in these states," he said.

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Holder did not specify whether the rules would apply only in the states which have broadly legalized marijuana, or also to states which have legalized it for medicinal use.

In August, the attorney general announced the Obama Administration would not seek to overturn the Colorado and Washington state measures. He said federal drug agents would continue to leave most drug law enforcement to local authorities and would focus on large drug operations, setting priorities that appeared to make it unlikely the feds would engage in aggressive enforcement in the states which have legalized pot.

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UPDATE (Thursday, 9:30 P.M.): This post has been updated with a clarification from the Justice Department.