Colorado medical marijuana business owners are turning their attention to Congressional lawmakers for banking relief now that a Colorado proposal to create their industry’s own financial institution was killed on Valentine’s Day.
Sen. Pat Steadman’s, D-Denver, proposal to create a financial cooperative for medical marijuana businesses was postponed indefinitely by the Senate’s Finance Committee. It would have been set up like a credit union, he said, but it would not have been a credit union.
Steadman had argued that medical marijuana business owners need a place to put their money. He had heard stories of stick-ups and robberies as word spread that many dispensaries are operating as cash-only businesses.
The state demands that the medical marijuana industry be transparent in its bookkeeping. How could they, he asked, without a bank?
But, the finance committee didn’t see it his way.
“It sounds like the state is afraid of being charged by federal government with money laundering,” said Mark Slaugh, Colorado Springs Medical Cannabis Council membership director.
For months now, Colorado medical marijuana business owners have been shut out of banks. And now, about 150 dispensary owners across the state are searching for a bank that will take their accounts.
Last year, Colorado dispensaries received notice from the last known bank to openly welcome the dispensaries’ business that it would no longer keep their accounts.
Banks fear being accused of money laundering and drug trafficking. While dispensaries and use of medical marijuana are legal in Colorado, the federal government does not recognize state’s authority and considers it illegal business.
The Federal Deposit Insurance Corp., one of three banking regulators, has not issued specific guidance for banks about doing business with the medical marijuana industry. However, federal law requires banks to report suspicious activity. And, in June, the U.S. Deputy Attorney General James Cole issued a memo to states attorneys that said, “Persons who are in the business of cultivating, selling or distributing marijuana, and those who knowingly facilitate such activities, are in violation of the Controlled Substances Act, regardless of state law.”
Slaugh said Colorado now has to rely on House Bill 1984, which is still in the wings at the national level. That bill, proposed by U.S. Rep. Jared Polis (D-Colo.) introduces the “Small Business Banking Improvement Act of 2011” which would allow financial institutions to work with medical marijuana businesses without fear of running afoul of federal banking regulations. It is one of three bills introduced that specifically address banking and taxation for the medical marijuana industry.
“It’s the only way to change this now,” Slaugh said.
There is no telling where the bill fits in the national discussion, he said. There are 16 states that either have medical marijuana dispensaries or allow individuals to grow marijuana for themselves. That number is projected to grow to 25 states within three years.
But, national lawmakers do not appear to be focused on small business right now, Slaugh said.
“They should be demanding from national reps to get this through,” Slaugh said of Colorado’s lawmakers. “It’s a real security threat. We’ve had assaults and attempted robberies. It’s ludicrous to have stacks of cash to pay bills.”