Marijuana co-op bill step toward finding "the last major piece of our pot puzzle," rep says
Colorado legislators have tried for years to find a state-centric solution to federal banking regulations as they apply to marijuana -- rules that have forced many shops to deal mainly in cash. But previous efforts have failed, and many observers thought this year's attempt at laying the groundwork for so-called marijuana co-operatives would meet the same fate. But the bill passed -- barely -- and awaits Governor John Hickenlooper's signature.
What's the measure do? Will co-ops ever come to pass? Or is the effort mainly symbolic? Here's what Representative Jonathan Singer, the bill's sponsor, has to say.
House Bill 14-1398, on view below, is complicated, Singer concedes -- "but if I was to tell you what it did in a sentence or two, I'd say that it creates a financial services cooperative for the marijuana industry that's otherwise up until this point been unbanked. It gives businesses the opportunity to form a cooperative that works like a credit union, but with even more scrutiny -- and no federal insurance."
In addition, Singer continues, "It allows us to fire a shot across the bow of the Federal Reserve. Not only does it give them a plan for what we think banking should look like for marijuana if traditional banks can't step up to the plate, but it would actually put in place these cooperatives, which would make those arguments for the state. Because the federal government doesn't deal in hypotheticals."
In shepherding the legislation through the general assembly, Singer achieved a goal that predates the 2012 passage of Amendment 64. The previous year, after major banks throughout the state stopped working with marijuana businesses to avoid running afoul of federal drug-trafficking laws, Senator Pat Steadman spoke to us about creating credit unions for dispensaries and the like at a statewide level. But Steadman's proposal died in early 2012, and subsequent efforts to revive the concept went nowhere.
Senator Pat Steadman with Governor John Hickenlooper at the 2013 signing of the civil unions bill.
After Amendment 64's passage, federal officials belatedly pledged to make changes to the banking system in regard to marijuana -- but banking memos issued in February did little to assure the financial industry. The documents gave banks permission to offer financial services to legal marijuana businesses, but they also required them to submit filings known as "Suspicious Activity Reports," or "SARS," that we described at the time as "onerous and dripping with potential liability -- perhaps so much so that banks may still shy away from working with marijuana businesses."
That proved to be the case. Indeed, many if not most marijuana businesses remain largely cash operations, with all the dangers that entails.
"The Denver Police Department said that in 2009, something like 17 percent of shops were robbed or burglarized," Singer says, "and another analysis from NBC said that out of 325 companies in Denver, there had been 317 burglaries and seven robberies over the previous two years. And these places aren't being targeted for one kind of green. They're being robbed for the kind of green that works on every street corner: cash."
In the meantime, Singer continues, "the federal government isn't seeing the issue on the same level we are. These are business owners and workers whose safety is being put at risk -- and the same thing goes for community members. Let's say a robber thinks he knows where a dispensary owner lives. But what if he goes to the wrong house and starts demanding to know where the cash is? You might have a suburban couple that's got no idea what's going on and are now at risk of their lives because the Federal Reserve won't step up and let this now-legal industry access the same services anybody else can."
Continue for more about the marijuana co-op bill, including the complete document.