Colorado lawmakers moved the marijuana industry away from its cash-only roots on Wednesday when they approved the world’s first financial system for marijuana businesses. The plan sets up a network of uninsured cooperatives, which gives the industry an avenue to basic banking services.
Even in light of Eric Holder’s comments on banking, marijuana businesses have still had a hard time finding banks to even let them open checking accounts, for fear of committing a federal crime. According to an AP article by Kristen Wyatt, “Shop owners in the state say a small number of credit unions will do business with them, too, though no banks or credit unions have said so publicly.”
Colorado’s new plan for banking would let marijuana business pool money in cooperatives, which would let stores accept credit cards and checks. However, these co-ops would need U.S. Federal Reserve approval first.
The plan has bipartisan support, partially because it gives the state the ability to audit marijuana shops and make sure they are paying taxes. Even Gov. John Hickenlooper supports the plan, and has pledged to sign it into law once he receives the final language of the bill.
Establishing a co-op-based banking system for marijuana businesses reduces the risk of crime by moving large cash reserves out of stores and into banks. It makes the industry more accountable and establishes a system that other states can follow as they begin to tax and regulate marijuana.
For medical marijuana dispensary owners and the patients who rely on them for access to their medicine, Colorado Congressman Ed Perlmutter’s (D) bill is common sense.
Perlmutter introduced legislation yesterday that would allow legal marijuana-related businesses to have access to traditional banking services. The Marijuana Business Access to Banking Act aims to accomplish this by updating federal banking laws to account for discrepancies with state laws: Currently, financial institutions are barred from working with any organization that sells a controlled substance, regardless of whether the state it resides in permits marijuana sales. Banks that violate this law risk losing their deposit insurance or their federal charter. If the bill is enacted, medical marijuana dispensaries – and the businesses getting ready to open for recreational marijuana sales in Colorado and Washington – will finally have access to bank accounts, credit cards, and loans.
Under the current system, medical marijuana dispensaries are forced to operate on a cash-only basis. For many businesses, this means storing hundreds of thousands of dollars in personal safes, carrying sacks full of hundreds to the state Department of Revenue in order to pay taxes, and looking for unusual sources of start-up revenue. For some businesses, the added burdens have forced them to close shop.
Jamie Lewis, a board member of the National Cannabis Industry Association and owner of two Denver-based medical marijuana companies, said, “Each year, my companies contribute to the five million dollars in tax revenue Colorado collects from the sales of medical marijuana. Making those tax payments is unnecessarily challenging because we do not have access to banking services other local businesses take for granted. Regulators, business owners, and medical marijuana patients alike all deserve the accountability, safety, and efficiency offered by this legislation.”
The bill has been backed by a bipartisan group of 16 Republicans and Democrats, including co-sponsors Jared Polis of Colorado and Denny Heck of Washington.