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Banks Get Guidance On Legalized Marijuana Businesses

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The Obama administration issued new rules today intended to ease the concerns of banks wanting to deal with businesses that legally sell marijuana. The rules, issued by the Treasury and Justice Departments, are intended to "move from the shadows the historically covert financial operations of marijuana businesses," said Jennifer Shasky Calvery, director of Treasury's Financial Crimes Enforcement Network.

Under the new regulations, banks wishing to do business with marijuana dealers must verify that they are properly licensed and must gather information about the types of products they sell and the nature of the customers they serve. Banks must also be alert for any signs that the dealers are engaged in improper transactions.

Current rules require banks to notify federal regulators of suspicious activity by their customers, which currently would include any marijuana dealer because of the prohibitions under federal law. Under the new rules, the notices will still be required, but banks that believe a marijuana dealer is reputable will file a "marijuana limited" report. If a bank believes a dealer is not behaving under guidelines, the bank should file a "marijuana priority" report, which could be based on such factors as greater revenue than local competitors or an inability to demonstrate that revenue is derived exclusively from legal sales.
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