White House Green-Lights Banks to Serve Pot Shops

Government memos give higher hopes to marijuana businesses.

A budtender pours marijuana from a jar at Perennial Holistic Wellness Center medical marijuana dispensary, which opened in 2006, on July 25, 2012, in Los Angeles.

The Justice Department will not punish financial institutions for doing business with marijuana shops. 

By + More

The White House announced Friday it won’t prosecute financial institutions solely for doing business with marijuana shops.

According to a pair of memos released by the Department of Justice and the Treasury Department,

banks should use caution and avoid doing business with marijuana sellers who sell to minors or engage with organized crime groups, but the federal government will not target banks simply for opening accounts for state-legalized pot shops.

"In general, the decision to open, close or refuse any particular account or relationship should be made by each financial institution based on a number of factors specific to that institution," a Treasury Department memo reads.

[READ: 18 Congressmen Ask Obama to Reschedule Marijuana]

The move has some marijuana advocacy groups stunned, surprised and even satisfied, as the memo signals a major shift from an administration that has sent mixed messages on pot legalization in the past. In a January New Yorker interview, President Barack Obama argued pot was no more dangerous than booze, but his administration has been heavily criticized for raids on medical marijuana facilities and its refusal to declassify marijuana as a Schedule I drug, the government’s way of signaling to consumers that a drug is dangerous.

Before Friday’s announcement, many marijuana businesses were operating their shops as cash-only outfits and transferring large sums of money to private safes, a step that local law enforcement warned could be a threat to public safety.

“Short of removing marijuana as a Schedule I drug, this is the best the administration could have done,” says Aaron Houston, a spokesman for Weedmaps and an advocate for legalization who has worked extensively on Capitol Hill to legalize marijuana.

[ALSO: Marijuana Legalization Increasingly Popular in Colorado, But Smoking Pot Isn't]

While the federal government stopped short of declassifying pot, the announcement reveals the Obama administration's willingness to change with the times as pot grows in popularity. So far, 20 states and the District of Columbia have legalized marijuana in some form. A recent poll showed that 52 percent of Americans support legalizing marijuana. Only Washington and Colorado allow residents to use the drug recreationally, but policy experts have long argued legalizing pot would give the government a big economic boost.

The push to declassify marijuana continues, however. While banks may feel more obliged to open accounts, offer loans and do business with pot shops, marijuana groups say cannabis businesses still face obstacles in the marketplace.

“I hope this is enough for banks to move forward, but that said, access to banking is just one of the many ways that state and federal laws are in direct conflict,” says Dan Riffle, director of federal policy for the Marijuana Policy Project.

Earlier this week, a coalition of 18 members of Congress pressured Obama to use his authority under the Controlled Substances Act of 1970 to remove marijuana from its classification as a hazardous narcotic. Removing marijuana from the list of Schedule I and Schedule II drugs, experts say, would give marijuana businesses the ability to deduct basic business expenditures from their taxes.