Colorado law sets up marijuana banks; feds must OK
DENVER — Seeking to move marijuana businesses away from cash-only operations, Gov. John Hickenlooper signed legislation Friday that tries to establish the world’s first financial system for the newly legal industry in Colorado.
The legislation seeks to form a network of uninsured cooperatives designed to give pot businesses a way to access basic banking services like checking. But approval from the Federal Reserve remains a hurdle.
Out of fear of violating federal law, banks don’t work with marijuana businesses. That has led to concerns that the burgeoning marijuana industry could be a target for robberies.
Mike Elliott, executive director of the Marijuana Industry Group, said a member of his organization was robbed a few days ago. The cash-only model has become stressful for businesses and their employees, he said.
“We don’t a need a vault. What we need is checking,” he said. “We’re looking for a way to take cash out of the businesses.”
Colorado became the first state to allow recreational pot sales on Jan. 1. Denver Police issued a crime alert Thursday warning of a plot to rob marijuana couriers, those who take dispensary proceeds to pay taxes or bills.
The legislation would allow pot businesses to pool money in cooperatives. However, that will only happen with the blessing of the Fed, which has to agree to give the businesses access to payment systems.
That has prompted some in Colorado to argue the legislation is merely symbolic.
One of the sponsors of the banking bill, Sen. Pat Steadman, D-Denver, said the legislation is an important step.
“At minimum, it’s a ‘send a message’ bill. Hopefully, it becomes a leverage point to get some attention and get some action on the part of the federal government,” he said. “Because they hold the keys on this one. We can’t solve this problem at the statehouse in Denver. It’s going to require action and participation on the part of federal officials and hopefully this gets us there.”
He said Friday that he had not heard anything from the federal government.
The U.S. Treasury Department said in February that banks could serve the marijuana industry under certain conditions. But a lot of banks have said the guidelines are too onerous.
Elliott said that has created a “ridiculous scenario” where pot businesses must pay taxes, but they end up doing so with piles of cash.
“We would love to pay our taxes with a check,” he said.
He said he doesn’t know yet whether Colorado’s banking plan will work. No businesses have yet said they plan to try forming a cooperative.
“But it’s us in Colorado doing everything we can to try to solve this problem,” he said.