'Cannabis co-op': Colorado's marijuana banking plan fails
Since marijuana was legalized in Colorado for recreational use on January 1, cannabis stores have struggled with financial services because of the federal government’s inaction. Banks are prohibited from accepting funds that they know a business has earned through illegal means, meaning that because marijuana is illegal on the federal level, financial institutions cannot currently receive money from legal state stores.
While Colorado has not experienced any notable crime increase since the beginning of legalization, cannabis business owners have admitted nervousness about making all their dealings in loose cash. Oftentimes the thousands of dollars a company earns in a day or week – or millions of dollars, as businesses reported in January – may simply be locked in a safe at the back of a store instead of being tucked away in regulated accounts.
As such, businesses are also unable to take advantage of the services that traditional companies rely on every day. The measure in question was born out of this need and would have permitted state-licensed cannabis shops to come together in a co-op (although the service would not have been insured as a normal credit union is).
A bill was introduced late Wednesday and cleared a state House committee Thursday, according to the Associated Press. Yet, only hours after passing through the first committee, a second committee amended the bill, tabling it until the possible ramifications could be better examined.
“Let’s take some time to have this properly vetted,” said Representative Kevin Priola (R-Henderson), who sponsored the delaying amendment.
Others said the plan was destined for failure because even if the bill passed, it still would have required authorization from the US Federal Reserve, which is widely considered impossible. One lawmaker compared the idea to “throwing spaghetti noodles against the wall to see if they stick.”
“Anything we do at the state level is not going to get around the issue of money laundering without the cooperation of the federal government and the Federal Reserve,” Rep. Chris Holbert told the Denver Post. “Aren’t we building a system that puts these co-ops in the business of money laundering?”
While the bill did not offer enough detail to help strapped business owners sleep at night, Rep. Jonathan Singer, a Boulder Democrat, said such a measure is the best the state can do, at least for now.
“This is a message to the federal government to say we are ready to go,” he said. “Start with a template, then ask for federal approval, sending a very clear message.”
In February, after nearly two months of not enforcing federal drug laws in Colorado and Washington state – which also voted to legalize marijuana – the Obama administration announced it had authorized the banking industry to finance and do business with state-licensed marijuana businesses. The Department of Justice ordered prosecutors not to pursue banks that deal with dispensaries.
The Treasury Department mandated that banks must now only file a “marijuana limited” report that makes it clear the business is abiding by the government’s guidelines – a stipulation which includes ensuring that profits are not ultimately handed over to known criminals. If a bank determines that a business is operating illegally in any way, they must file a “marijuana priority” notice alerting law enforcement to this fact.
At the time, bank representatives said only that they would review the new federal guidelines.