Officials work on fix for cash-only pot shops

Marijuana businesses that can’t use banks would be a risk to public safety, officials say

Staff writersSeptember 11, 2013 

WASHINGTON — King County Sheriff John Urquhart says the war on drugs has failed and that legalizing marijuana is the way to go, which might be a good thing in his case. In less than nine months, he’ll have 61 retail pot shops operating in his county, the most in Washington state.

But when marijuana issues got a long-awaited airing Tuesday on Capitol Hill, Urquhart told the Senate Judiciary Committee that he fears the state’s 334 new pot stores will be inviting targets for armed robbers: The shops will be forced to do business only in cash, because federal law prevents drug-related businesses from opening bank accounts.

“I am simply asking that the federal government allow banks to work with legitimate marijuana businesses who are licensed under state law,” said Urquhart, a 37-year police officer who was elected sheriff last year.

The request drew a sympathetic response from Senate Judiciary Chairman Patrick Leahy of Vermont, who said he wants to make sure state-licensed pot businesses can use armored vehicles to transport their money, as well.

“I don’t want to see a shootout somewhere,” Leahy said.

Deputy Attorney General James Cole told senators that the Justice Department is studying the problem and agrees “that it is an issue we need to deal with.”

That acknowledgment comes less than two weeks after the Justice Department said it would allow Washington and Colorado to proceed with their plans, even though marijuana has long been banned by Congress. Gov. Jay Inslee met Tuesday with Washington’s U.S. attorneys, Jenny Durkan and Michael Ormsby, to follow up on that decision.

The Justice Department’s permission gives hope to Rick Garza, who leads Washington’s marijuana regulators, that the banking issue will also be resolved.

“I think this creates a breakthrough, in this announcement from DOJ, where it’s possible that the federal banking regulators can now maybe come forward and be more flexible,” Garza, director of the state Liquor Control Board, told state lawmakers at a separate hearing Tuesday in Olympia.

But Rep. Steve Kirby, a Tacoma Democrat who chairs the state House banking committee, threw cold water on the idea that regulators alone could open the door for marijuana banking. He said Congress would have to roll back a host of laws.

“Banks are not going to just allow a billion dollars to go in and out of their institutions just on a handshake and the word of a political figure in Washington, D.C.,” Kirby said after the hearing. “Right now the laws are clear. These aren’t just rules. These are actual laws that have been passed by Congress and signed by the president.”

Denny Eliason, a lobbyist for the Washington Bankers Association, agreed Congress would probably have to act, although he said the Justice Department is working with federal banking regulators and might come up with some kind of a solution.

Banks need an “ironclad” guarantee that they won’t be punished, Eliason said.

If a solution does come, Eliason said banks are eager to take on the new business from the marijuana industry.

“We want to be a part of this stream of commerce some day,” he said.

ENDANGERING PUBLIC?

Leahy called Tuesday’s hearing to examine the growing tension between state and federal marijuana laws. As part of its new policy, the Justice Department said it would allow the states to sell and tax marijuana if they did a good job policing themselves – ensuring no pot is sold to minors or allowed to cross state lines.

Instead of helping the states sell marijuana, opponents said the Justice Department should be moving to shut down their operations.

Kevin Sabet, a legalization opponent who served as an adviser on drug issues to President Barack Obama and former Presidents George W. Bush and Bill Clinton, said Washington state and Colorado will become the first jurisdictions in the world to allow retail sales and commercial production.

Sabet told the senators that allowing the two states to start “a massive for-profit commercial industry for marijuana” will endanger Americans by leading to more drug sales and trafficking. And he said as the price falls in those states, the pot is sure to be sold across state lines at a handsome profit.

“We are at a precipice,” he said.

RISKY BUSINESS

Officials in both Washington state and Colorado have turned their focus to the banking front, saying the current laws would create a huge risk to public safety if they’re not changed.

Mark Kleiman, Washington state’s top marijuana consultant and a professor of public policy at the University of California, Los Angeles, said the two states will conduct “hundreds of millions of dollars per year in cash transactions, with attendant risks of robberies.”

“That risk to public safety seems, to me, unnecessary and unaccompanied by any good result,” Kleiman said in a written statement to the Judiciary Committee.

But Urquhart told the senators that even though Washington state needs a fix on federal banking laws, drug laws will still be enforced in the state.

“What we have in Washington state is not the wild, wild West,” he said.

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