New Jersey Pot Industry May Find Itself Cash-Only, Senators Warn

Ever try to run a business entirely in cash? New Jersey’s U.S. Senators are calling attention to a lesser-discussed ripple effect from Attorney General Jeff Sessions’ recent decision to roll back the “Cole Memo” on federal-state marijuana policy… banking anathema.

Sessions’ decision earlier this month – which lets federal prosecutors choose how aggressively they want to enforce federal marijuana law – is a steep departure from the Obama-era policy, which generally lets states with legal marijuana programs operate without federal interference, including law enforcement crackdowns.

But on Thursday, Senators Robert Menendez and Cory Booker reminded New Jersey cannabis advocates and industry workers that Sessions’ memo may also have serious ripples in the banking world.

In a joint statement, Menendez and Booker urged the head of the Financial Crimes Enforcement Network (FinCEN) - the federal agency tasked with safeguarding the nation’s financial system from "illicit use" including money laundering - to maintain its recommended rules for banks and financial institutions that serve marijuana-related businesses.

Read the full letter here.

Menendez and Booker said the banking industry could get cold feet about dealing with marijuana businesses – including medical marijuana dispensaries – and force them into a cash-only existence. If so, it would hamper New Jersey’s medical marijuana industry, leaving military veterans and those suffering with cancer with less access to non-opioid alternatives.

• See related article: Will Sessions' New Policy Kill Buzz For Legal Pot In New Jersey?
• See related article: 'Marijuana Is Medicine,' New Jersey Court Says

In their letter, the senators said that in response to the Cole Memo, authored by then-Deputy Attorney General James Cole in 2013, FinCEN issued guidance on how financial institutions could provide services to marijuana-related businesses.

“Unfortunately, the recent decision by Attorney General Sessions’ to rescind the Cole Memo has layered more uncertainty onto an industry already facing challenges,” the senators wrote in their letter. “Owners of such businesses report that ‘they live constantly with shifting legal terrain, losing their bank accounts and lines of credit and never knowing how vulnerable they may be to losing their business or being federally prosecuted.’ Without access to the banking sector, these businesses will face serious challenges paying their employees, conducting transactions with vendors, and meeting state tax obligations. Moreover, this could stall or even end efforts in New Jersey to help those suffering with cancer, veterans and other patients from getting non-opioid alternatives to serious medical issues.”

After being questioned by Menendez during a Banking Committee hearing on Wednesday, Under Secretary for Terrorism and Financial Crimes Sigal Mandelker testified that the FinCEN guidance “remains in place.” However, Mandelker added that the U.S. Treasury Department is currently reviewing that guidance in light of the Cole Memo reversal.

• See related article: New Jersey Marijuana Patients Offer Human Side To Weed Debate
• See related article: Legal Marijuana Could Bring New Jersey $1B In 1st Year: Law Firm

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Photo: Flickr / Brian Shamblen