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Banks in Michigan unsure how to deal with money generated by medical marijuana

401(K) 2012

Michigan banks say they could be penalized for accepting money from medical marijuana growers or distributors.

Medical marijuana is legal in Michigan but illegal at the federal level - a loophole that could leave banks in the state open to federal penalties if they accept the money it generates.

In January Attorney General Jeff Sessions nixed an Obama era rule known as the Cole memo, which advised federal prosecutors to allow states to decide how to prosecute marijuana.

Patricia Herndon is with the Michigan Bankers Association. She said in other states with legal medical marijuana banks have dealt with marijuana money.

“We would expect the same thing to happen here but the timing of the rescission of the Cole memo adds some uncertainty.”

Herndon said the association is hoping for some federal guidelines on what to do.

“What we are trying to do is establish some clarity from a law enforcement and regulatory perspective for our banks.”

Herndon said under federal law banks that work with Medical Marijuana money could face penalties for laundering drug money. It’s not clear how much marijuana money is currently being kept outside of banks.

She said there is no indication of when the federal government could offer guidelines on how banks should proceed, but the Michigan Bankers Association will look to the US Treasury for guidance.

Earlier this month, U.S. Treasury Secretary Steve Mnunchin said of finding a marijuana banking services "we do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution."

In the meantime, legal grow operations are in limbo about where to keep their money.