Bank Lawyer's Blog

The Marijuana Minefiled Continues To Claim Banks

No matter how many times commentators like this curmudgeon warn banks that decide to dip their toes in the toxic waters of banking marijuana businesses, some banks not only don't "get it," they don't get it that they don't get it. At least, they don't until the regulators whack them upside the head.

The latest slow learner is apparently Millennium Bank, a small ($73 million) bank in Des Plaines, Illinois. According to the American Banker's Kevin Wack (paid subscription required), in March 2016, that bank entered into a consent order with the FDIC and Illinois banking authorities that "a source familiar with the matter" claimed "stemmed from the bank's involvement in serving pot businesses." As consultant Steven Kemmerling notes, there is no "template" for banks serving marijuana businesses to navigate the mysterious waters of the FinCEN "guidance" issued in March 2014, which purported to give financial institutions a path to serving marijuana businesses that were engaged in state-legal, federal-illegal activities. The consent order itself does not mention marijuana, and its numerous requirements could be interpreted as an indictment that the bank in question did not have even a basic BSA program required to meet applicable law and regulation. Kemmerling anticipates additional consent orders "as regulators continue to refi9ne how to safely bank marijuana." In other words, the smoke has not yet cleared on how to break federal criminal laws without, you know, getting your writs slapped.

The fact that the consent order (found here) nowhere uses the word "marijuana" indicates that the bank regulators are not anxious to admit that they are tacitly permitting (according to the article by Mr. Wack) 301 banks to engage in activities that are literally illegal. As Alabama Law Professor Julie Anderson Hill pointed out in an excellent law review article that we discussed last year, the regulators who fudge on these activities face another potential risk.

If the Federal Reserve provided payment services to a cannabis credit co-op, the Federal Reserve and its employees would be engaging in money laundering. They might also be conspiring to manufacture and distribute marijuana, aiding and abetting the manufacture and distribution of marijuana, and acting as accessories after the fact for the manufacture and distribution of marijuana. 

When marijuana advocates ask the bank regulators for "clarification," they are praying for rain in Death Valley. What's needed is action from the US Congress, action that would make banking state-legal marijuana businesses also legal under federal law. At that point, more "clarification" on BSA procedures might actually be useful. Don't expect Congressional action this year.

Incidentally, all those banks that are chomping at the bit to get their hands on drug money might want to consider the long-term effects of legalized recreation marijuana use. Trail blazer Colorado is experiencing some kick back from being the Mile High State.

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I am giving a one-hour webinar for BankersHub on July 19 on the banking and credit union regulators' expectations for technology service agreements. You can find information here.

Fourth Corner: Staying Power or Sampling The Product?

When last we checked in January on the trials and tribulations of Fourth Corner Credit Union, a state-chartered Colorado credit union formed to provide financial services to the marijuana industry, the credit union had been denied an injunction by a federal district court in Colorado to force the Federal Reserve Bank of Kansas City to grant the credit union a "master account." It needs that master account to gain access to the banking system. The district court judge ruled that the court was not going to compel the Fed to grant access to a credit union that would facilitate illegal money laundering under federal criminal laws (albeit an activity that is fine and dandy under Colorado law). The court also "hinted" that if it ever got to the merits of the issue of whether Colorado marijuana laws trumped federal marijuana laws, the Supremacy Clause of the US Constitution would lead the court to favor federal law.

On April 29th, the credit union appealed the district court's decision to the 10th US Circuit Court of Appeals in Denver. I have not reviewed the appellant's brief, so all I have to go on regarding the arguments to support the appeal thus far are the public statements of the credit union's spokesperson as reported in The Denver Post. Those statements don't fill me with an excess of hope that the credit union's appeal will be successful. The arguments seem to be:

• The Justice Department and FinCEN are "hypocritical" for issuing guidance that would lead banks to believe that they can successfully avoid prosecution under federal law if they follow the guidance without actually allowing them to do so.
• The government bureaucracy moves slowly, so drug money can't be laundered through the banking system and is, thus, "unsecured," and that "scares" the spokesperson.
• A decision was rendered by a Colorado district court judge that marijuana buds were covered under a general liability insurance policy, a decision that the court made clear involved solely state, not federal, law.
• The US Supreme Court declined to hear a lawsuit filed by the states of Nebraska and Oklahoma against the state of Colorado, a decision that was based solely on jurisdictional grounds, in that the alleged harm is being caused by individuals, not by a state, and, therefore, the SCOTUS does not have jurisdiction to hear the case. The attorneys general of Nebraska and Oklahoma can refile the case in federal district court.

There may be fine legal arguments made by the credit union that support its contention that the Fed must issue it a master account. If so, they are not making it into the main stream media. If all it's got is what I read in the newspaper, I'd recommend that the CU roll 'em if its got 'em, don't Bogart the joints, slap a few Cheech & Chong cd's in the boom box, and "get mellow," because the future is looking somewhat gloomy in the real world.

Then again, come November, we have absolutely no idea what kind of wild card the electorate might draw for the Oval Office. We might actually get a president and Congress that will take the Thai Stick by the lit end and burn down the barriers to a full monty of a Mary Jane-friendly society. Or, those of us who haven't rolled a joint in nearly a half century might be compelled to nestle down in the high country with a M249 SAW, a bale of concertina wire, a half-dozen claymores, plenty of bottled water and Tostitos, and several pounds of Ghost Train Haze and Blue Dream. And yes, unlike our former president and future first man, in such circumstances, we would plan to inhale.

Fourth Corner Painted Into A Corner

This past week, a federal district court judge in Colorado slapped down, hard, Fourth Corner Credit Union. In the process, the judge was equally hard on the federal government that has done a half-baked job in dealing with the problem of state-legal marijuana businesses inability to to obtain access to the nation's financial system because their activities largely remain illegal under federal criminal laws.

As regular readers may recall, Fourth Corner Credit Union is a state-chartered credit union in Colorado that was formed in 2014 by (in the lofty rhetoric of the credit union's attorneys) "ten courageous citizens" to provided banking services to the "compliant, licensed cannabis and hemp businesses and to thousands of persons, businesses and organizations that supported the legalization of marijuana." In order to effectively operate, however, Fourth Corner needed a "master account" from the Federal Reserve Bank of Kansas City. The FRB-KC turned down Fourth Corner's application for such an account on several the grounds, including that federal law preempts state law and that the FRB KC won't grant a master account to a financial institution that is engaged in the facilitation of illegal activities (like the laundering of the proceeds illegal drug sales). Fourth Corner sued for a mandatory injunction by the court that would compel the FRB KC to grant the master account. The district court denied the motion, dismissed (with prejudice) the credit union's complaint, and awarded the FRB KC its reasonable costs.

That had to hurt.

Although the court declared that it did not need to reach the issue of federal preemption, it observed in a footnote that "[i]t is clear, however, that Congress has the power to prohibit cultivation, distribution and use of marijuana notwithstanding compliance with state law." In other words, even though I didn't have to decide the issue, if I had, I would have upheld federal preemption of state law.

That blasted the "Supremacy Clause" of the US Constitution (Article VI, Paragraph 2)! It's so inconvenient.

In the course of its opinion, the judge blistered the backsides of federal regulators, with special emphasis on FinCEN and the US Justice Department for their "guidance" on this issue. Fourth Corner alleged that such guidance provided federal "authorization" to serve marijuana-related businesses ("MRBs"). The judge didn't buy it (anymore than I did).

The problem is, the FinCEN guidance and Cole memorandum do nothing of the sort. On the contrary, the Cole memorandum emphatically reiterates that the manufacture and distribution of marijuana violates the Controlled Substances Act, and that the Department of Justice is committed to enforcement of that Act. It directs federal prosecutors to apply certain priorities in making enforcement decisions, but it does not change the law. The FinCEN guidance acknowledges that financial transactions involving MRBs generally involve funds derived from illegal activity, and that banks must report such transactions as “suspicious activity.” It then, hypocritically in my view, simplifies the reporting requirements.

In short, these guidance documents simply suggest that prosecutors and bank regulators might “look the other way” if financial institutions don’t mind violating the law. A federal court cannot look the other way. I regard the situation as untenable and hope that it will soon be addressed and resolved by Congress."

Since next year is a presidential election year, "soon" is not likely to be prior to 2017. Until then, to repeat ourselves, any bank that serves marijuana related businesses "is playing with fire and not wearing an asbestos suit."

playing with fire and not wearing an asbestos suit. - See more at: http://www.banklawyersblog.com/3_bank_lawyers/2015/10/over-the-summer-while-i-was-downing-cold-beers-by-the-barrel-the-federal-reserve-bank-of-kansas-city-and-the-ncua-finally-ac.html#sthash.qKIhqoJx.dpuf

playing with fire and not wearing an asbestos suit. - See more at: http://www.banklawyersblog.com/3_bank_lawyers/2015/10/over-the-summer-while-i-was-downing-cold-beers-by-the-barrel-the-federal-reserve-bank-of-kansas-city-and-the-ncua-finally-ac.html#sthash.qKIhqoJx.dpuf

playing with fire and not wearing an asbestos suit. - See more at: http://www.banklawyersblog.com/3_bank_lawyers/2015/10/over-the-summer-while-i-was-downing-cold-beers-by-the-barrel-the-federal-reserve-bank-of-kansas-city-and-the-ncua-finally-ac.html#sthash.qKIhqoJx.dpuf

Funnel Accounts: Be Very Afraid

While slaving away for "The Man," alert reader John Thomas warned me that FinCEN's black ops storm troopers are hot on my trail and to run for cover before they scooped me up and waterboarded me, not for any useful information I might cough up but just for the sheer pleasure of watching me drown.

Funnel account activity was the standout trend in Suspicious Activity Report (SAR) filings in 2014, according to the latest report from the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).

FinCEN’s second annual SAR Stats,  published Wednesday, highlights how FinCEN uses SARs to track down criminals through their use of the financial system. It was based on SARs filed from March 1, 2012, through Dec. 31, 2014.

FinCEN defines a funnel account as an account that receives multiple cash deposits, often in amounts below the cash-reporting threshold, and from which funds are withdrawn in a different geographic area with little time between deposits and withdrawals.

According to FinCEN, funnel account activity was mentioned almost 10,000 times in SARs in 2014.The same references occurred no more than 123 times in 2012 and 2013.

While it eventually occurred to John that FinCEN had misspelled my name, I doubt that would have deterred them for long. Upon receiving that warning, I stopped the practice of making multiple cash deposits, and now make a cash deposit only when checks received total $9,999.99, which given my astoundingly low billable hourly rate and dearth of clients will mean that I am making deposits only twice a year. In addition, I have bribed FinCEN's pet goat, Elizabeth Maxine Waters-Warren, with a family concoction: funnel cake. I have thereby assured myself that any SAR with the name "funnel," "funnell," or "kevin" eventually will go the way of most SARs: into a compost heap.

Thanks for the heads up, John. You saved my bacon, or at least, my cabrito.

The Fed On MJ Banking: Nyet

Over the summer, while I was downing cold beers by the barrel rather than blogging, the Federal Reserve Bank of Kansas City and the NCUA finally acted on the applications of Fourth Corner Credit Union for, respectively, a "master account" for access to the Federal Reserve System and for insurance of share accounts. In both cases, the answer was not only "No," but "Hell, No!" Fourth Corner sued both the NCUA and the Fed. last week, the Fed filed a Motion to Dismiss Fourth Corner's complaint that ought to send a chill down the spine of every bank in Colorado, Washington, Oregon and Alaska that thinks it can "work around" the federal banking regulators on the Supremacy Clause when it comes to banking a state-legal, federal-illegal marijuana business.

In broad strokes, the Fed alleges that federal law, in this case the Controlled Substances act, trumps state law on marijuana use by virtue of the Supremacy Clause of the US Constitution. This should be "Hornbook Law" to any bank regulatory attorney. The manufacture, sale, and distribution of marijuana is prohibited by the Controlled Substances Act. Therefore, "any affirmative action that Colorado has taken to facilitate the distribution of marijuana is preempted by federal law."

In the present case, Colorado attempted to grant TFCCU a charter that would, in effect, intentionally allow TFCCU to aid and abet violations of federal law by offering banking services to businesses engaged in the manufacture and/or distribution of marijuana. Such an act is preempted by federal law and is void and without effect...The Court would not aid other such attempts--such as if Colorado enacted a scheme to allow trade in endangered species or trade with north Korea in derogation of federal laws, and then chartered a credit union to handle finances for companies conducting such illegal trade...TFCCU is not an entity that can be recognized under federal law" and the credit union's complaint must be dismissed.

Beyond the "master account" and insurance of accounts applications at issue here, the Motion to Dismiss contains a broad condemnation for any existing financial institution--credit union or bank--that thinks that it is somehow safely avoiding federal criminal law prosecution and/or bank regulatory agency enforcement action because it follows the "FinCEN Guidance" issued in early 2014 that, in turn, followed the "Cole Memorandum" guidance provided to US Attorneys on prosecutorial discretion in the area state-legal marijuana businesses. The Fed contends that such "guidance" is not a protection from criminal prosecution (which the guidance itself states, if read carefully). Even if it affords such protection, the Fed makes clear that the Fed would not be bound by it.

The Fed also makes clear that it considers any financial institution that engages in providing financial services to a state-legal marijuana business to be engaging in aiding and abetting a criminal activity under federal law, and that federal law controls. Under that analysis, the Fed should, if it is consistent, take enforcement action against any Fed-member bank that is so engaged. I fail to see why the OCC, FDIC, or NCUA would take a contrary position.

An anonymous (naturally) critic from Dogpatch, U.S.A., attempted to leave a comment on the blog a few months ago that criticized my support of (the critic's phrase) "federal infallibility" regarding state marijuana laws. The poor soul apparently conflated "Papal Infallibility," a theological doctrine of the Roman Catholic Church, with the constitutional principle of "Federal Supremacy. The issue at stake is not who is "right" or "wrong" regarding whether the manufacture and distribution of marijuana for recreational use should or should not be illegal, it is whose law prevails when state and federal law conflict on this matter. My view is that federal law prevails and that any financial institution (and its directors, officers, and employees) that "banks"  a state-legal marijuana business is running a serious risk of being hammered by different federal agencies for violating federal criminal laws.

If your credit union's or bank's business plan is "I feel lucky today," more power to you. I think that you're playing with fire and not wearing an asbestos suit.

No Mystery Why CUs Not Filing More SARs

A recent post on the allegations by FinCEN director Jennifer Shasky Calvery that credit unions are lackadaisical about filing suspicious activity reports led not only to noisy "un-subscriptions" to this blog by some apparently offended credit union readers (usually, only a post bashing Elizabeth Warren causes that reaction), but an actual thoughtful and civil response from long-time credit union attorney Hal Scoggins. Mr. Scoggins failure to adopt the usual "shoot-the-messenger" approach to blog reading marks him as a man of taste and discrimination, as does, obviously, his interest in reading the deep thoughts of Jack Handy this blog's author, a man who a once received an email from a New York-based think tank that advised him that he could be a "thought leader" if only he weren't so flippant. Dream on!

Hal gave me permission to post his response here, so here it is (edited to remove an favorable comments about me, since I am currently positioning myself as the "Anti-Trump" foretold in the Book of Revelations):

A quick comment on your 9/17 post about Jennifer Shasky Calvery’s comments on CUs that haven’t filed SARs or CTRs.  I read her comments and initially thought, “Wow, that’s scary." A “statistically significant” number of credit unions have not filed any SARs or CTRs.”  But it’s a little less scary when one considers a couple of points about credit unions: 

* The NCUA’s call report data for June 2013 shows that there are 6284 credit unions in the United States.

* The same call report data shows that 1892 of those credit unions have total assets under $10 million.   (30% - that’s statistically significant.)

* Average asset size of those 1892 credit unions is just over $4 million.

* Average number of members:  826

* Average number of employees:  1.4 FT and 1.2 PT

I could not pull pure cash data from the NCUA data, but I looked at a couple of random CU’s call reports; one $2.5 million and one $1.5 million.  They had cash on hand of $26,000 (yes, thousand) and $15,000, respectively.  I would guess that a statistically significant number of those credit unions do not offer checking accounts.  Only 287 offer credit cards, and I was shocked the number was that high. 

When the CU has only $4 million in total assets, 800 members with an average account balance of about $5000, and there is probably only $40,000 in cash in the entire CU, there are probably not going to be any times where someone is bringing in or taking out $10,000 in cash (no CTRs).  Plus, you don’t offer enough services to be that useful for criminal activity, and there are probably not many times where the member is doing a transaction that the credit union doesn’t have enough knowledge about to take it out of the realm of suspicious activity (no SARs).  If 30 percent of CUs in the country fit that profile (and it appears they do), it is a lot easier to see how a “statistically significant” number haven’t filed any SARs or CTRs for a couple of years.

Valid points, and they ought to be considered by all fair minded folks without an axe to grind, which, I think, leaves out 99% of commercial bankers and at least one bank law blogger who is more interested in eliciting a drive-by guffaw than being a "thought leader" (whatever the hell that is).

In a later email, Hal made the following additional point, which is also telling.

My reaction now (after doing that tiny bit of research) is – you’re the director of FinCEN, and you can’t have one of your flunkies do 10 minutes of research to provide some context before you make a speech like that? Or better yet, require the flunkie to do 10 minutes of research to provide some context at the time they actually provide you with the info for your little sound bite?

Research? We don't need no stinkin' research! We're the federal "guhment" and we've just been making it up as we go along since 1789.

Besides, Calvery needs food for FinCEN's pet goat and she wants all financial institutions, taxable and tax-free, to get on the stick and start winnowing the forests. SARs: it's what for dinner!

No SARs? No Worries!

Banks and credit unions have been gnawing on one another like Donald Trump on Carly Fiorina's face since before The Donald's dad gifted him with his first blow dryer (which, I believe, was some time before Cro-Magnon Man out-bred Donald's Neanderthal ancestors). Credit unions want to make business loans like banks and banks want to be tax exempt, too. Or, something like that.

Amidst all the "Am Not-Are Too" finger-pointing engaged in by both segments of the financial industry, there is clearly one area of business where banks are beating credit unions to the punch, time after time: SAR-filing (paid subscription required).

Speaking Tuesday to the National Association of Federal Credit Unions, Financial Crimes Enforcement Network Director Jennifer Shasky Calvery said that an unusually large number of credit unions have not filed suspicious activity reports or currency transaction reports for nearly two years.

"Some early research we are looking at suggests that we have a surprisingly larger … statistically relevant and unusual number of credit unions that over a seven-quarter period — so almost a two-year period — filed neither a SAR or CTR," she told the trade group's congressional conference.

She acknowledged that "there could be problems with the data," but added that "the number is surprising, so we are trying to understand that."

Now, this is the same Jennifer Shasky Calvery who last year declared that the battle to pry open the banking business for state-legal recreational marijuana businesses had been won, so a healthy dose of skepticism might be warranted as to the reliability of these statistics. Still, no SARs or CTRs at all?

I guess its safe to say that many credit unions are not overspending on their anti-money laundering compliance staff. Which, I suppose, is just fine until, you know, it isn't.

Don't Ask, Don't Tell

You may recall last year's pronouncement by the head of FinCEN, Jennifer Shasky Calvery, that 105 financial institutions were, thanks to the amazing guidance provided in February 2014 by FinCEN, servicing state-legal, federal-illegal marijuana businesses. Apparently, less than 10% of those are in Colorado, land of the free and home of the dazed, because according Colorado Rep. Jared Polis, only eight commercial banks and two credit unions in that state are banking the pot biz, and none of them want to be publicly named.

I assume that they don't want to happen to them what happened to publicity-challenged MBank out of Oregon. As recently related in published reports, that Oregon bank announced in January that it was open for (marijuana) business not only in Oregon, but in Colorado, and that it had the "tacit approval" of the FDIC to bank the unbankable. Within less than a week, because it was supposedly "overwhelmed" by the response from Colorado marijuana businesses, it pulled entirely out Colorful Colorado. Now, it's announced that it has pulled out of the entire marijuana business nationally, even in its home state of Oregon, apparently haven satisfied the munchies and gotten a good night's sleep. Like the Colorado exit, the industry-wide exit is supposedly due to the unexpected response of unbanked pot sellers and the bank's determination that "the bank is not big enough to provide and support all of the compliance components required."

It may be pure coincidence, but it appears that any time a bank is publicly "outed" as a banker to the stoned, the bank pulls out of the business. None of the 105 institutions cited by Ms. Calvery or the ten cited by Mr. Polis was named. Had they been, how many of them would have "pulled an MBank"? Most, if not all, is my guess.

Unlike banking payday lending, a perfectly legal business that the regulators are trying to eradicate, banking marijuana selling, a blatantly illegal business (under federal criminal laws), is just fine with the federal banking regulators as long as the bank flies under the radar screen. It's OK to service an illegal drug business as long as you (A) file the right kind of Cheech & Chong SAR or SARs, and (B) don't ever, ever, let anyone but the illegal business owners and bank officials know about it. Do you think that this state of affairs breeds cynicism and contempt for the rule of law? Me, too.

"Don't Ask, Don't Tell." It was bad policy for the US military and it's no better for the US banking business.

US Justice Department to Banks: SARs May Not Be Sufficient

Most bankers I know always love to receive a helping hand from federal law enforcement officials in making their daily lives just a little bit better. That's why I'm sure that most bankers smiled wide when an Assistant US Attorney General recently told a gathering of bankers that when it comes to reporting suspicious activity, a SAR is often not nearly enough.

“The vast majority of financial institutions file suspicious activity reports when they suspect that an account is connected to nefarious activity,” said assistant attorney general Leslie Caldwell in a Monday speech, according to prepared remarks. “But, in appropriate cases, we encourage those institutions to consider whether to take more action: specifically, to alert law enforcement authorities about the problem.”

[...]

A tip-off from a bank about a suspicious customer could lead law enforcement to seize funds or start an investigation, Ms. Caldwell said.

Sure, that makes sense. Bankers have nothing better to do than to do your job for you, right Leslie? The difference between filing a SAR and picking up the phone and reporting your suspicions to a cop is that the SAR is confidential (the subject of the report should never know one was filed) and applicable law provides for banks that file them a "safe harbor" from a lawsuit by the subject of the SAR (in all but in cases of the most egregiously bad faith filings). Those specific protections do not apply to a phone call or an email to a cop.

As a commenter to the linked article observed, "[i]f the Feds would actually do something about the millions of SARs we (financial institutions) have filed, some of these criminals would be in jail." To "do something," the Feds would have to rip those SARs from the gravitational pull of the black hole into which they're apparently dumped and read them, something that bankers have believed for years rarely happens. On the other hand, as FinCEN's head boasted last year regarding all the Cheech & Chong SARs that banks in Colorado have been filing on "legal" marijuana-related businesses, FinCEN actually read 62% of them. That left 38% to be eventually transformed into goat pellets after being consumed by FinCEN's pet goat.

My guess is that many banks will continue to believe that filing a SAR is a more than sufficient "tip off" for any law enforcement agency that actually is interested in uncovering crime.

Changing of the Guard at DOJ

The recent confirmation of Loretta Lynch as the none-too-soon successor to the current Commissar Attorney General of the United States, engendered a lot of speculation about whether or not the exit of "Fast and Furious" Holder will also spell the end of Operation Choke Point. In a Senate hearing, Ms. Lynch was less than enlightening on this point.

In response to questions by Senator Mark Lee, a Chock Point critic, she sounded positively tepid.

Lynch told the senator that should she be confirmed, she would work with him to ensure that law-abiding Americans aren’t targeted by the initiative.

“I look forward to hearing your concerns and working with you on them,” she said.

Let's hope that when she uses the term "working with you" she doesn't really mean "working you over." Time will tell.

On another issue, however, she differs markedly from her boss, the Department of Justice, and FinCEN, which have been falling all over themselves to aid the heirs to Cheech and Chong to light up their bongs. Unlike Barack, Loretta loathes the demon weed.

A federal prosecutor in New York, Ms. Lynch told the Senate Committee on the Judiciary she disagreed with the president’s no-big-deal take on pot, saying, “I certainly don’t hold that view and don’t agree with that view of marijuana as a substance.”

“I think the president was speaking from his personal experience and personal opinion, neither of which I’m able to share,” Ms. Lynch said. “But I can tell you that not only do I not support the legalization of marijuana, it is not the position of the Department of Justice currently to support the legalization. Nor would it be the position should I become confirmed as attorney general.”

A stated opposition to "legalizing" marijuana could be read as merely opposing legalization at the federal level. In addition, personally opposing legalization, even at the state level, does not necessarily translate into abandoning the current position of the DOJ as embodied in the "Cole Memorandum" and its spawn at the DOJ and FinCEN. That position appears to be that as long as a state legal marijuana business doesn't run afoul of eight listed activities which the DOJ thinks are "really, really bad" (as opposed to being merely "really bad"), then federal law enforcement will look away. In the case of banks that service such "legal/illegal" businesses, as long as they file special super secret SARs and perform initial and ongoing due diligence with a level of detail that would confound the NSA, the Feds will cut them a break, as well.

 

Pot's proponents claim that we should not take Ms. Lynch seriously. They note that she was testifying before a committee chaired by the marijuana-repulsed Chuck Grassley. I guess their point might be that she was "spinning" (i.e., committing perjury).

 

Assuming, however, that she was actually delivering her honest opinion to Senator Grassley, I think that Ms. Lynch's arrival on the scene may bode ill for the "three monkeys approach" to the future enforcement of federal drug laws against businesses that are engaged in state-legal-federal-illegal marijuana businesses. "Looking the other way" might prove to be a thing of the past for the DOJ, even before a Republican AG takes office in 2017 (should a Republican win the White House in 2016).

 

Moreover, the rogue banks in Colorado, Oregon, and elsewhere, who, in banking marijuana businesses, have been operating under the "don't-ask-don't-tell" benevolence of the FDIC and other federal banking regulators who take their cues from the head of the Executive branch (although they would deny that allegation until the end of time), may find that the examiners who have been giving them "tacit approval" to bank marijuana businesses as long as they don't make that fact public, are suddenly attacked by fits of rectitude and begin to take federal drug trafficking laws seriously again. If that happens, good luck with holding the agencies to their "tacit" approval.