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65 Case W. Res. L. Rev. 597 (2014-2015)
Banks, Marijuana, and Federalism

handle is hein.journals/cwrlrv65 and id is 637 raw text is: 


CASE  WESTERN   RESERVE   LAW  REVIEW  - VOLUME  65 - ISSUE 3 - 2015
                   Banks, Marijuana, and Federalism


            BANKS, MARIJUANA, AND

                       FEDERALISM


                       Julie Andersen   Hillt

                            ABSTRACT

    Although  marijuana  is illegal under federal law, twenty-three
states have legalized some marijuana  use. The state-legal marijuana
industry is flourishing, but marijuana-related businesses report diffi-
culty accessing banking  services. Because financial institutions will
not  allow marijuana-related businesses to open accounts, the mari-
juana industry largely operates on a cash-only basis-a situation that
attracts thieves and tax cheats.
    This Article explores the root of the marijuana banking problem
as well as possible solutions. It explains that although the United
States' dual  banking  system  comprises  both  federal- and  state-
chartered institutions, when it comes to marijuana  banking, federal
regulation is pervasive and  controlling. Marijuana  banking  access
cannot  be solved by the  states acting alone for two reasons. First,
marijuana is illegal under federal law. Second, federal law enforcement
and  federal financial regulators have significant power  to punish
institutions that do not comply with federal law. Unless Congress acts
to remove  one or  both of these barriers, most financial institutions
will not provide services to the marijuana industry. But  marijuana
banking  requires more than just congressional action. It requires that
federal financial regulators set clear and achievable due  diligence
requirements  for institutions with marijuana-business customers. As
long as financial institutions risk federal punishment for any mari-
juana  business  customer's misstep,  institutions will not provide
marijuana banking.









t    Associate Professor of Law, University of Alabama School of Law. This
     Article was presented at the Marijuana, Federal Power, and the States
     Symposium  hosted by  Case Western  Reserve School of Law. The
     comments I received from symposium participants were invaluable. I am
     also grateful to Michael Hill for his helpful comments on this Article. To
     ward off marijuana jokes from my family and friends, I note that I have
     never used marijuana and do not intend to start.


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