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Jason Dunn, Colorado's U.S. attorney, photographed on Friday, April 12, 2019. (Jesse Paul, The Colorado Sun)

Colorado’s top federal prosecutor says that he would never tell banks working with legal marijuana businesses in the state that they are devoid of criminal liability. 

“As federal prosecutors,” Jason Dunn told The Colorado Sun on Tuesday, “we will never tell them that what they are doing is lawful under federal law. There’s always a risk, just like a retail marijuana business in Colorado, that they face federal prosecution. There is no carve out from federal prosecutions.”

Dunn and his office, however, have never prosecuted a financial institution whose clients include cannabis companies or, for that matter, a retail marijuana establishment operating legally under state law.

“But that’s not to say we haven’t looked at them and that’s not to say that we’re not continuing to look at them,” he said.

Dunn says he expressed his position during an August conference in Denver for banks doing business with, or seeking to work with, the pot industry. He spoke to The Sun after a story published Tuesday about how as many as 35 financial institutions are offering services to hundreds of cannabis businesses under the close watch of federal regulators, even though marijuana is still illegal under federal law. 

MORE: Congress is weighing whether to give marijuana businesses access to banks. In Colorado, that’s already happening.

Banks working with legal marijuana businesses can meet regulatory compliance under guidance provided in 2014 by the U.S. Treasury Department’s Financial Crimes and Enforcement Network. But meeting that guidance does not mean they are in the clear in the eyes of federal criminal law.

Cannabis plants grow inside RiNo Supply’s cultivation facility near Lafayette on Thursday, Dec. 13, 2018. The greenhouse uses automated fans and lights to maintain efficient growing cycles while also reducing energy-consumption costs. (Andy Colwell, Special to The Colorado Sun)

Under federal statute, financial institutions that handle the deposits of legal marijuana businesses are laundering money. 

“That’s a risk assessment they have to make,” Dunn said. 

He sees the current system as problematic since the Treasury Department’s guidance means banks working with legal marijuana businesses have to frequently file “suspicious activity reports” to remain in regulatory compliance. 

Dunn fears that that an increase in the number of those reports will overwhelm the system and make it difficult for federal officials to keep tabs on suspicious activity.  “My understanding is that they probably aren’t getting adequate review,” he said.

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Banks must tell the Treasury Department whether they think a client is following their state’s marijuana laws or not in those suspicious activity reports, and that is also problematic, Dunn said.

“We’re basically telling banks, ‘You need to be a state regulator,’” Dunn said, calling their position a “weird, quasi-governmental role.” 

He cited Partner Colorado Credit Union, which has taken on hundreds of cannabis industry clients, as an example.

“It sounds like they are doing due diligence, but they’re not a state regulator and it shouldn’t be their job to be a state regulator,” Dunn said. “We’ve got what I think is a very odd dynamic and situation that doesn’t seem to be a good way to regulate an industry. I think it just further highlights that we need a resolution at the federal level one way or the other.”

One potential solution to financial institutions’ tenuous position with regard to the cannabis industry is the SAFE Banking Act, a measure that cleared the U.S. House last week that would protect banks and credit unions from prosecution if they handle legal pot money. 

The bill’s prime sponsors include U.S. Rep. Ed Perlmutter, D-Arvada, and U.S. Sen. Cory Gardner, R-Colorado, and is awaiting debate in the U.S. Senate. 

Jesse Paul is a Denver-based political reporter and editor at The Colorado Sun, covering the state legislature, Congress and local politics. He is the author of The Unaffiliated newsletter and also occasionally fills in on breaking news coverage....