UPDATE: Colorado Pot Co-op Bill Passes House and Senate, Awaits Governor’s Signature
UPDATE May 8, 2014 – Colorado H.B. 1398 has passed both the Colorado House and Senate and is awaiting the signature of Gov. John Hickenlooper.
As originally written the bill would only have allowed state-licensed marijuana businesses to create not a bank or credit union but a financial cooperative. As amended, however, the bill covers marijuana businesses and suppliers, and the hemp industry.
Whether or not it passes, financial professionals in Colorado remain concerned that the bill, which is not state-sponsored, doesn’t address federal money laundering laws. However, the law, if passed, would allow entrepreneurs who decide to form a co-op to ask the Federal Reserve Board of Governors for acceptance.
Even so, said Chris R. Myklebust, who serves as commissioner of financial services for the Colorado Department of Regulatory Agencies, and was as a technical advisor on the legislation at the request of the governor’s office, “The conflicts between state and federal law in this area create an uncertainty for everyone involved and that’s problematic. It is important for these issues to be addressed in a satisfactory manner that allows compliant organizations to move forward in good faith.”
UPDATE May 5, 2014 – A measure that would make it legal in the state of Colorado for state-licensed marijuana businesses to create a financial co-op—HB1398—has been shelved. While it cleared a House committee May 1, soon after, another committee opted to continue studying the issue of marijuana businesses having difficulty accessing banking services.
May 2, 2014 – Arlington, Va. – A measure that would make it legal in the state of Colorado for state-licensed marijuana businesses to create a financial co-op—HB 1398—has been introduced in the Colorado House of Representatives. The proposed legislation has the backing of the office of Colorado Gov. John Hickenlooper. The bill would create an uninsured financial cooperative to provide basic deposit and financial services to the marijuana industry. The enitity would be neither a bank nor a credit union, but would be heavily regulated at the state level. Chris R. Myklebust, commissioner of financial services for the Colorado Department of Regulatory Agencies, served as a technical advisor on the legislation at the request of the governor’s office.
The preamble to the proposed bill cites public interest, among other considerations, as driving the need for the legislation. Specifically, the bill cites the large amounts of cash stored as contributing to increased crime, and the diffculty of tracking sales for state revenue and monitoring purposes because of the all-cash nature.
Two years ago, state lawmakers tried to set up a state-chartered bank for the marijuana industry, but that effort failed. Mycklebust, however, believes HB 1398 is different from the attempt two years ago, in that it will move the discussion with the federal government away from community banks and credit unions. His opinion is that this is a state’s rights issue. Co-ops would need to have access to the Federal Reserve System before a charter could be granted.
Read the proposed HB 1398 in its entirety here.