Marijuana money: Can you take it to the (state) bank?

A lawmaker proposes creation of a state bank as a way to deal with federal concerns about where pot store money ends up.
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A lawmaker proposes creation of a state bank as a way to deal with federal concerns about where pot store money ends up.

A tricky matter for Washington's still-in-the-works marijuana industry is the federal law on money laundering.

The statutes on the topic say it's illegal for a commercial bank to lend or hold money to grow and sell pot. So, Washington's future growers, processors, retailers and possibly consumers cannot legally use commercial banks to save or borrow money for their pot-related activities — raising questions on how do these businesses get money to set up, and what do they do with the cash they earn.

A few days ago, Sen. Bob Hasegawa, D-Seattle, has pre-filed a bill to create a state institution, essentially a state-owned bank, that would handle marijuana-related money in Washington. This would include holding the money, lending it, handling deposits and tracking where it goes.

While Washington's and Colorado's fledgling pot industries are technically illegal under federal law, an Aug. 29, 2013  U.S. Attorney's memo outlined what the two states would have to do for the feds to supposedly keep hands off of the two experiments with legalized marijuana.  One of the eight conditions in that memo calls for safeguards that marijuana money won't go to criminals, gangs and cartels.

Hasegawa said his bill would tackle that wrinkle of the U.S.Attorney General's requirements.

Growers, processors and retailers would put their own money into the state-owned bank, which would be used to nurture Washington's marijuana industry. Also, revenues, taxes and cash flows could be more easily traced if all the marijuana money goes through one institution, Hasegawa said. "If every transaction goes through this bank, we can track every dollar that moves,"he said.

Many questions are open on such a state-owned marijuana bank, Hasegawa said. These include how much state money needs to be allocated to set up and operate the bank's bureaucracy, how much money should be initially put in such a bank for the first loans, and whether retail customers should be required to somehow run their pot purchases through the bank.

Another pitfall is that the gentleman's agreement between the feds and the two states is a essentially a handshake deal that the federal government could decide to ignore. That raises the possibility that an employee of a state-owned marijuana bank could be charged federally with drug money laundering, Hasegawa said.

"Yes, we would be assuming risks. There's no question about it,"Hasegawa said. He said it is up to the Legislature to map out how much risk should be assumed by a state-owned marijuana bank.

That could be a tricky call all by itself.


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About the Authors & Contributors

John Stang

John Stang

John Stang is a freelance writer who often covers state government and the environment. He can be reached on email at and on Twitter at @johnstang_8