DENVER -- The U.S. government issued rules on Friday for the first time allowing banks to legally provide financial services to state-licensed marijuana businesses.
The Justice Department issued a memorandum to prosecutors that closely follows guidance last August largely limiting federal enforcement priorities to eight types of crimes.
These include distribution to children, trafficking by cartels and trafficking to states where marijuana isn't legal. If pot businesses aren't violating federal law in the eight specific priorities, then banks can do business with them and "may not" be prosecuted.
The Treasury Department's Financial Crimes Enforcement Network issued guidelines that Director Jennifer Shasky Calvery said was intended to signal that "it is possible to provide financial services" to state-licensed marijuana businesses and still be in compliance with federal anti-money laundering laws.
"That guidance seeks to mitigate the public safety concerns created by high-volume cash-based businesses without access to banking and the financial system, while at the same time ensuring that criminal organizations, gangs and drug cartels do not have access to the financial system to launder criminal proceeds," said U.S. Attorney for the District of Colorado John Walsh.
The guidance falls short of the explicit legal authorization that banking industry officials had pushed the to government provide.
“In fact, it is even stronger than original guidance issued by the Department of Justice and the Treasury,” said Don Childears, president and CEO of the Colorado Bankers Association. “After a series of red lights, we expected this guidance to be a yellow one. This isn’t close to that. At best, this amounts to ‘serve these customers at your own risk’ and it emphasizes all of the risks. This light is red.”
Childears said the only way to solve the problem is an act of Congress.
“It is important that a solution be reached, and soon,” Childears said. “Banking services would greatly resolve state regulation and taxation issues, serve customers and businesses in legal transactions and help public safety.”
But because marijuana remains illegal under federal law, classified alongside heroin as among the most dangerous substances, officials say this is as far as the government can go.
Shasky Calvery said the government can't give any legal guarantees and acknowledged that some financial firms won't likely choose to do business with pot businesses.
Marijuana has been legalized for recreational and other uses under state laws in Colorado and Washington state. Eighteen other states and the District of Columbia allow marijuana use for medicinal purposes.
Attorney General Eric Holder said recently that he was moved to act as "an attempt to deal with reality that exists in these states."
Speaking at the University of Virginia's Miller Center last month, Holder said forcing marijuana businesses to be cash businesses, because they can't access banks, was a public safety problem.
"Huge amounts of cash, substantial amounts of cash, just kind of lying around with no place for it to appropriately deposited is something that would worry me from just a law enforcement perspective," he said.
FinCEN's legal guidance creates two new categories for banks to report transactions with marijuana businesses.
All transactions will be labeled as "suspicious" and banks will have to file so-called Suspicious Activity Reports. Those transactions that banks believe are legal marijuana business can be reported to FinCEN as "marijuana limited" transactions. Those that banks believe may be illegal would be filed as "marijuana priority" transactions and would generate further scrutiny from regulators.
Democratic congressman Jared Polis praised the government's decision and went a step further calling for the government to make marijuana legal across the country.
Polis has sponsored a bill that would lift the federal ban on marijuana.
“Today’s announcement gives me confidence that the President is beginning to put in place policies that reflect his recent statement that marijuana is less dangerous than alcohol. I look forward to continuing to work with my colleagues in Congress and with the Administration to ensure the law reflects scientific realities,” Polis said in an statement.
CNN contributed to this report.