Mr. President, Stop Encouraging Money Laundering

03.28.2014 | Steven Peterson |

In 2014, the citizens of Colorado decided to allow cannabis use for recreational purposes. Coloradans had already decided to allow medical use of cannabis earlier, recreational use means Colorado has just dropped the other shoe. Overnight, cannabis dispensaries appeared to provide this previously illegal substance to willing users. Buyers lined the sidewalk as they waited for their opportunity to legally purchase a substance still listed as a schedule I controlled substance under federal law. In this cash-only business, dispensaries take in thousands of dollars per day, but since federal law prohibits cash deposits from specified illegal activities, banks are unable to accept dispensary monies. This forces dispensary owners to either bring this money home with them or find some place to stash huge amounts of cash. This also makes them potential targets to violent criminals intent on robbing them of their ever growing mountain of dollars.

In February 2014, Attorney General Eric Holder directed Colorado banks to allow cannabis dispensaries to deposit their cash proceeds, as long as the banks practiced due diligence in determining that these dispensaries did not violate the eight principles previously dictated for cannabis distribution; such as preventing the distribution of marijuana to minors and preventing marijuana possession or use on federal property. This direction is not a change in the law prohibiting banks from accepting cash proceed deposits, nor is it a change in the law that allows federal law enforcement from seizing these proceeds for violation of money laundering statues. It is an unenforceable policy that can just as easily be rescinded by a new administration, putting banks and those accounts at risk. Banks should not accept these deposits until amendments in current laws pass. To accept proceeds is still in violation of federal law, even if the business is legal under state statutes.

Mr. President, put aside all emotion over medical or legal cannabis. Regardless of your stance, allowing dispensaries to deposit proceeds is an incredibly naive and ignorant act. To force banks to discern whether dispensaries are in violation of one of the eight principles before accepting their deposits is ridiculous. When banks begin accepting cannabis proceeds deposits, all other types of criminal organizations will rush to Colorado and open cannabis dispensaries in an effort to mingle and hide the proceeds of their other criminal activities. Colorado will become the home of organized crime from all over the world, as criminals will see this loophole as a way of introducing their illegal proceeds into the world financial system.

Enforce or change the banking laws. Don’t weaken existing ones. Take a stance, one way or the other. Not everyone will agree with either choice, but at least you’ll be consistent. While you may feel that cannabis use is a “bad habit,” the substance is still controlled and the use of it still illegal. Therefore, your stance, Mr. President, as the highest federal law enforcement officer in the country is confusing and hypocritical and may enable the growth of organized crime to the detriment of law enforcement at a local, state and, federal levels.

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Steven Peterson

Steven R. Peterson is Vice President of the National Law Enforcement Speakers Bureau, providing training to police. Peterson retired as the most experienced DEA Street Agent in the U.S. serving undercover to obtain the seizure of a 3.5 ton cargo of cocaine-the biggest confiscation at that time in US history.

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