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WASHINGTON -- U.S. law enforcement agencies are in talks about steps they may take under federal law to allow legal marijuana businesses to have access to bank accounts, a Justice Department official said on Tuesday.

Deputy Attorney General James Cole said at a Senate Judiciary Committee hearing that the existing situation of marijuana shops operating on a cash-only basis created too many dangers, such as possible robberies or fraud.

The Justice Department is reviewing the issue with the Treasury Department's Financial Crimes Enforcement Network (FinCEN), which targets money-laundering, Cole said.

"It's important to deal with that kind of issue, and we're at the present time talking with FinCEN, and they're talking with and bringing in bank regulators to discuss ways that this could be dealt with in accordance with the laws that we have on the books today," he said.

Although the Justice Department in August gave states new leeway to experiment with legalized marijuana, the drug remains illegal under federal law. As a result, under anti-money-laundering rules, banks are prohibited from handling proceeds from marijuana sales.

That means marijuana shops have a hard time getting banking services, such as checking and savings accounts that most U.S. businesses consider essential.

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Two states, Colorado and Washington, voted to legalize marijuana for recreational use in 2012, and about 20 states, plus the District of Columbia, allow the use of medical marijuana.

Cole did not say when U.S. agencies would complete their review, or what the possible outcomes were. FinCEN spokesman Steve Hudak said separately by phone that the agency was reviewing the latest developments.

Fearing tax evasion

Officials in Colorado and Washington are pushing the federal government to give banks and credit unions breathing room to take on marijuana businesses as clients.

"Cash-only businesses are very difficult to audit, leading to possible tax evasion, wage theft and the diversion of resources we need to protect public safety," Sheriff John Urquhart of Washington's King County testified at the Senate hearing.

If banking regulators do not agree to changes, supporters of marijuana legalization have said they will push Congress to amend federal law to allow banking services.

Senator Chuck Grassley of Iowa, the top Republican on the Judiciary Committee, said legalization supporters were overlooking the dangers of what he called a "dangerous and addictive drug."

"We already have a pretty good idea of how it works out, and the answer is: badly," he said, citing statistics about marijuana confiscated in his state that originated in Colorado.

Cole, in his testimony, said the Justice Department was faced with bad options before it said last month it would not sue to block the efforts in Colorado and Washington.

A federal lawsuit to block decriminalization would not have been very successful, he said. On the other hand, he said, the Justice Department did not want to sue over state regulatory regimes, for fear it would result in marijuana being both legal and unregulated in the two states.

"There are no perfect solutions here," Cole said.