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The federal government is looking for a way for financial institutions to conduct transactions with legitimate marijuana businesses, according to the Associated Press.

At a congressional hearing on Tuesday, Deputy Attorney General James Cole said the Justice Department and federal banking regulators want to change rules that lead federally insured banks to refuse to allow marijuana-related businesses to open accounts. Currently, processing funds from marijuana sales can put federally insured banks at risk of being charged with drug racketeering crimes.

Cole testified before the Senate Judiciary Committee several weeks after the Justice Department announced it will allow Colorado and Washington to carry out their new recreational marijuana laws. Marijuana continues to be an illegal drug under federal law.

According to Committee Chairman Senator Patrick Leahy of Vermont, the constraint on banks has led legitimate marijuana businesses to operate on a cash-only basis, which leads to tax evasion and other criminal activity. Cole agreed, adding that cash-only businesses present a public safety issue, because they can result in the presence of guns.

After American Express announced in 2011 that it would no longer handle medical marijuana-related transactions because the company feared federal prosecution, Cole told banks that if they engage in transactions involving the proceeds of marijuana sales, they may be in violation of federal money laundering statutes and other federal financing laws.

Senator Chuck Grassley of Iowa asked Cole what the Justice Department will do to prevent marijuana from being diverted from states where it is legal to states where it remains illegal. “If it’s being exported from Colorado to Iowa and we find out about it, we will prosecute,” Cole responded.

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