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Jan 23 (Reuters) – U.S. treasury and law enforcement agencies will soon issue regulations opening banking services to state-sanctioned marijuana businesses even though cannabis remains classified an illegal narcotic under federal law, Attorney General Eric Holder said on Thursday.
Holder said the new rules would address problems faced by newly licensed recreational pot retailers in Colorado, and medical marijuana dispensaries in other states, in operating on a cash-only basis, without access to banking services or credit.
Proprietors of state-licensed marijuana distributors in Colorado and elsewhere have complained of having to purchase inventory, pay employees and conduct sales entirely in cash, requiring elaborate and expensive security measures and putting them at a high risk of robbery.
It also makes accounting for state sales tax-collection purposes difficult.
“You don’t want just huge amounts of cash in these places,” Holder told the audience at the University of Virginia. “They want to be able to use the banking system. And so we will be issuing some regulations I think very soon to deal with that issue.”
Holder’s comments echoed remarks by his deputy, James Cole, in September during a Senate Judiciary Committee hearing on Capitol Hill.
Colorado this month became the first state to open retail outlets legally permitted to sell marijuana to adults for recreational purposes, in a system similar to what many states have long had in place for alcohol sales.
Washington state is slated to launch its own marijuana retail network later this year, and several other states, including California, Oregon and Alaska, are expected to consider legalizing recreational weed in 2014.
The number of states approving marijuana for medical purposes has also been growing. California was the first in 1996, and has since been followed by about 20 other states and the District of Columbia.
But the fledgling recreational pot markets in Colorado and Washington state have sent a new wave of cannabis proprietors clamoring to obtain loans and make deposits in banks and credit unions.
The Justice Department announced in August that the administration would give new latitude to states experimenting with taxation and regulation of marijuana.
But with the drug still outlawed at the federal level, banks are barred under money-laundering rules from handling proceeds from marijuana sales even in states where pot sales have been made legal.
The lack of credit for marijuana businesses, however, poses its own criminal justice concerns, Holder said.
“There’s a public safety component to this,” he said. “Huge amounts of cash – substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited – is something that would worry me just from a law enforcement perspective.”
Holder did not offer any specifics on a timeline for action on banking services for marijuana. Cole in September said the Justice Department was working on the issue with the Treasury Department’s financial crimes enforcement network.
Critics of liberalized marijuana laws have said the lack of credit faced by pot retailers was beside the point.
“We are in the midst of creating a corporate, for-profit marijuana industry that has to rely on addiction for profit, and that’s a much bigger issue than whether these stores take American Express,” said Kevin Sabet, co-founder of the anti-legalization group Smart Approaches to Marijuana. (Reporting by David Ingram in Charlottesville, Virginia; Writing by Alex Dobuzinskis; Editing by Steve Gorman and Lisa Shumaker)
A public official chosen by President Obama’s former chief of staff to oversee the finances of a major U.S. city faces more than a decade in jail for operating a huge kickback and money-laundering scheme as Ohio’s deputy state treasurer.
Nevertheless Chicago Mayor Rahm Emanuel, Obama’s good pal and one-time White House chief of staff, hired the corrupt official, Amer Ahmad, to be Chicago Comptroller. If you recall, Emanuel left his presidential job to become mayor of the Windy City in 2011. Before joining the Obama administration Emanuel served three terms in the U.S. House of Representatives and as a senior advisor in the Bill Clinton White House.
Yet, Emanuel claims through aides that he had no idea he was hiring a crook to supervise the city’s finances, though the mayor refuses to comment on his friend’s bribery scandal. A Chicago newspaper reports that City Hall hired a law firm to vet Ahmad and it confirmed no criminal wrongdoing by the former Ohio deputy state treasurer. Ahmad, who resigned abruptly as Chicago Comptroller in July, joined the Emanuel administration in 2011.
This week in a Cincinnati federal court Ahmad pleaded guilty to bribery and conspiracy to commit bribery, money laundering and wire fraud. The feds say he used his Ohio government job to secure “lucrative state business” for his high school buddy in exchange for more than half a million dollars in kickbacks. Besides facing up to 15 years in prison, Ahmad agreed to pay more than $3.2 million in restitution and $500,000 in fines, according to his plea agreement.
Attached to the plea document is the federal complaint outlining Ahmad’s illicit kickback scheme. Even though he was Ohio’s Chief Financial Officer and Deputy Treasurer, Ahmad was the president of one company and partial owner of another, the complaint says. Those are the businesses that were used to funnel the state money. The purpose of the conspiracy was clear, the complaint says; for the defendants to enrich themselves, their friends and associates.
This is hardly the first scandal to rock the Emanuel administration in its short tenure at the helm of Chicago City Hall. Emanuel got in trouble for unlawfully accessing the private information of Chicago public employees in an effort to get their support for his mayoral candidacy. Union leaders were up in arms and city employees accused him of invading their privacy. Then, the co-chair of Emanuel’s mayoral campaign, a high-level state employee, quit abruptly for illegally using public resources to conduct political business.
For his many transgressions, Emanuel has also appeared on Judicial Watch’s annual most corrupt politicians list. In 2010 Emanuel teamed up with his then Deputy Chief of Staff Jim Messina to interfere with Senate elections in two states by offering federal appointments to persuade candidates not favored by Obama to abandon their campaigns. Emanuel was also Obama’s chief negotiator with convicted Illinois Governor Rod Blagojevich as he tried to illegally sell Obama’s former Senate seat to the highest bidder, according to sworn testimony during Blagojevich’s federal trial. Judicial Watch covered both of Blagojevich’s trials in Chicago federal court. The jury deadlocked in the first trial and convicted him of 17 corruption charges in the second. The disgraced politician is serving a 14-year sentence in a Colorado federal prison.