Exclusive: US Department of Justice banking agency caught bribe policy reversal off guard – sources

WASHINGTON (Reuters) – When the US Department of Justice announced last week that it was overturning its $ 7 billion marijuana trade policy, it did not first notify federal officials who advise banks in states where the drug is legal, sources told Congress.

FILE PHOTO: Customers shop for “Green Friday” deals at the Grass Station marijuana store on Black Friday in Denver, Colorado, United States November 28, 2014. REUTERS / Rick Wilking / File Photo

The announcement by U.S. Attorney General Jeff Sessions, a longtime critic of the legalization of marijuana, has confused banks on how to do business with growers, processors and distributors of marijuana without breaking the rules. federal money laundering laws.

The uncertainty sparked a flood of phone calls to the Financial Crimes Enforcement Network (FinCEN), an office of the US Treasury Department, congressional offices with questions from lawmakers and constituents.

But FinCEN did not have ready-made answers as it received no advance warning of the Jan. 4 announcement of Sessions reversing an Obama-era policy that relaxed federal enforcement of marijuana laws, said congressional assistants who spoke on condition of anonymity.

A spokesperson for the Department of Justice declined to say whether he had coordinated in advance with FinCEN.

Sessions’ brutal announcement was the latest example of sudden actions by the Trump administration that caught its own government agencies off guard over major policy changes. In 2017, the administration blinded the Defense Department with a decision to ban transgender Americans from serving in the military. It has also taken the Department of Homeland Security a lot by surprise by barring people from certain predominantly Muslim countries from entering the United States.

Marijuana is banned by federal law, but it has become legal in one form or another in a number of states.

About 400 banks and credit unions do business with the US marijuana industry. Most are small institutions with operations limited to states where marijuana has been legalized.

Critics said the Justice Department’s decision, which gives prosecutors wide latitude to pursue criminal charges, could kick banks out of the cannabis industry.

Sessions released its one-page ad three days after California officially launched the world’s largest regulated commercial market for recreational marijuana. Five more states have legalized recreational use, while dozens allow medical use.

“I imagine Sessions didn’t even consider their action could trigger billions of dollars in cash by being unbanked,” said Saphira Galoob, whose company The Liaison Group lobbies on behalf of cannabis customers. .

Overthrowing the Obama administration, Sessions said the Justice Department was withdrawing legal guidelines known as the Cole and Ogden memos, widely seen as protection from lawsuits against cannabis companies in states where pot is legal. .

The memos indicated that while marijuana was still illegal, prosecutors would not prioritize criminal prosecutions in states that had their own regulatory regimes in place.

Deputy Attorney General Rod Rosenstein said in September that the marijuana policy was under consideration for possible changes.

In last week’s announcement, the Justice Department made no mention of the parallel marijuana guidelines that FinCEN issued in February 2014 in coordination with justice officials.

The guidelines have provided a route for banks to serve marijuana businesses in states such as Oregon, Colorado, Washington, and California. He relied heavily on the Cole memo.

FinCEN requires banks to file suspicious activity reports with the government on legally questionable transactions. The FinCEN guidelines state that banks must continue to file these reports, but allow them to say whether they are satisfied their cannabis customers are complying with relevant state laws.

Democratic Representatives Dennis Heck of Washington state and Ed Perlmutter of Colorado are expected to send a letter this week, seen by Reuters, to FinCEN urging it not to rescind the guidelines, fearing it “would create uncertainty over the guidelines. financial markets ”.

Stephen Hudak, a spokesperson for FinCEN, said in a statement that the agency’s guidelines “remain in place” despite actions by the Justice Department.

Reporting by Sarah N. Lynch; Editing by Kevin Drawbaugh and Grant McCool


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