DENVER The Colorado state legislature could decide soon if a new type of financial services co-operative though not a credit union will be created to serve the marijuana industry in the state.
A bill backed by the state's governor's office was introduced Thursday to be considered by Colorado's Committee on Business, Labor, Economic & Workforce Development.
House bill 1398 requests a state charter for a cannabis credit cooperative an uninsured financial services cooperative to serve the licensed marijuana dispensaries in this state.
It will be heavily regulated on the compliance side, according to Chris Myklebust, Colorado commissioner of financial services.
"The cooperative would create a financial institution that would allow licensed marijuana dispensaries to put their money in a regulated institution where they could get their cash into the Federal Reserve system," said Myklebust, a technical adviser on the bill.
Myklebust said the cooperative would remove the argument over whether CUs or banks in this state should accept deposits from licensed marijuana dispensaries.
"We have been very careful to make sure no one will confuse this cannabis credit cooperative with a credit union," said Myklebust. "It would be formed under an article of Colorado law. There is no reference to a common bond or anything that would confuse it with a credit union. It is taxable at federal, state and local levels, and most important, it is uninsured. We did not want to create any confusion in the minds of consumers that this is in any way connected with a credit union or community bank."
Myklebust pointed out that banks and CUs have not accepted deposits from marijuana dispensaries because under federal law they could be criminally liable for the actions of the dispensaries' customers.
Because marijuana is still illegal under federal law, marijuana businesses in the 20 states that allow the drug's sale for medicinal or recreational purposes often have a hard time finding financial institutions that are willing to be their partners.
Consequently, marijuana merchants often act as cash-only businesses. This has sparked fear that the shops will be targets for robberies, as well as concern that the businesses could be used to launder money.
Previous efforts in Colorado to establish a state-chartered bank and a medical marijuana cooperative to serve the marijuana industry failed. Myklebust gives the new bill a "50-50" chance of passing. The latest session of this state's legislature adjourns May 8.
Recognizing that credit unions and banks do not accept deposits from marijuana dispensaries, the Colorado commissioner said the cannibas cooperative is needed.
"These marijuana dispensaries, which are legal entities under Colorado state law, need a safe place to put their cash," he said.
The Colorado bill follows the Denver city council in January passing a proclamation asking that Colorado's legal marijuana businesses get access to the nation's financial system.
The proclamation came five days after Colorado became the first state to allow the sale of recreational pot. Denver's action adds to a growing chorus of calls for federal banking regulators to issue guidance designed to ease the concerns of wary credit unions and banks.