Here's what federal marijuana ban really means

R.E. Graswich commentary --

As California cannabis experts scramble to digest the federal government's latest refusal to remove medical marijuana from the notorious "Schedule I" list, it's easy to lose sight of the ban's deeper consequence.

It's all about banking.

As long as the Drug Enforcement Administration insists cannabis has no medical benefit, the product remains an off-limits, controlled substance in federal eyes. That means banks, which are federally regulated, won't touch marijuana industry accounts.

The banking standoff is the final arena where the federal ban collides with everyday realities. And those realities are large and painful and sometimes even deadly.

After decades of prosecutions, jail sentences and threats, the federal government has told state authorities it will no longer waste resources on local, garden variety cannabis cases, provided that state governments establish procedures to regulate the marijuana community.

The federal armistice provided motivation for last year's unprecedented trio of regulatory laws passed by the California State Legislature and signed by Gov. Brown.

Banks are another story. Operating under the authority of federal charters, they remain fearful of doing business with clients whose profits derive from a product on the DEA "Schedule I" list.

Banks worry they could be accused of money laundering, which would not play well with stockholders. Absent a special agreement with federal authorities, banks refuse to handle business from the cannabis universe.

The banking standoff has created a scourge for the cannabis industry -- business must be done in cash, a which forces even honest operators into the shadows and onto the margins of society and greatly enhances the likelihood of robbery, violence and mayhem.

Cannabis opponents in California have used marijuana's cash-industry status as evidence of the product's illicit nature, as if robberies are the fault of the victim. In fact, the "Schedule I" status and banking ban create opportunities for violence.

While political attention in California is focused on the adult-use initiative, Prop. 64, on the November ballot, the banking problem remains far more significant.

Until a cultivator, manufacturer, distributor or retail cannabis operator can walk into a bank and open an account like any other legitimate business, the marijuana trade will remain tainted and marginalized.

That's what "Schedule I" status really means.