DENVER — Everyone agrees that retail marijuana businesses need somewhere safe to keep their money, but a bill before Gov. John Hickenlooper to set up state cannabis banking cooperatives is being criticized as half-baked.
The Colorado Bankers Association switched its position on the bill from neutral to opposed hours before the legislative session ended Wednesday. The bill barely escaped the Democratic House on a 33-31 vote after Republicans accused Hickenlooper’s office of ramming through a sloppy, hastily written proposal destined to return next year for a major clean-up.
“What’s going on with this bill is an embarrassment, and the governor’s office should be embarrassed for bringing this up,” said House Minority Leader Brian DelGrosso (R-Loveland) during last week’s floor debate.
Even Mike Elliott, executive director of the Marijuana Industry Group, acknowledged that House Bill 1398 wasn’t ideal, but said it would be a helpful first step toward finding a permanent fix.
“Colorado is trying everything possible to solve this problem,” said Elliott in a statement. “HB1398 is likely not a solution to the banking problem, but an opportunity to move the conversation forward. It will allow cannabis credit coops to form, and seek permission from the Fed [Federal Reserve] to access merchant services and checking.”
Jennifer Waller, senior vice-president of the Colorado Bankers Association, said the proposed cannabis coops have no chance of gaining access to the Federal Reserve system, a necessary condition for receiving a charter from the state, because they deal with a product that’s illegal under federal law.
She said her association had agreed to remain neutral on the understanding that “this was more the state sending a message than creating anything that would truly work,” but moved to the opposition camp after the bill was amended shortly before passage to include the industrial-hemp business.
“I’m concerned due to the rush of the bill — there were no group meetings, this wasn’t a well-vetted, well-planned process — that there will be unintended consequences,” said Waller. “And then expanding their powers to include more industries seemed quite dangerous, when you still don’t know what you’re dealing with this one bill, and then you’re expanding it to include other industries. It seemed like an extremely bad precedent.”
State Rep. Libby Szabo (R-Arvada) tried unsuccessfully to reinsert a study on the issue after it was stripped by the House Appropriations Committee.
“I don’t normally like studies and task forces, but marijuana became legal, what, five months ago? And now we’re finding all kinds of issues with the legalization of it,” said Szabo. “And I think what we need to do before we rush into a Colorado state coop/marijuana bank—we need to study it.”
The largely cash-only marijuana industry has become ripe target for thieves. State Rep. Jonathan Singer (D-Longmont), the bill’s sponsor, pointed to figures from the Denver Police Department showing that 17 percent of retail marijuana operations had been robbed.
He said the bill’s cannabis cooperatives “aren’t banks, they aren’t FDIC or NCUA insured. What this bill does is create a cooperative system that’s highly regulated, looks similar to credit unions with greater scrutiny, and allows us to create a system where we can go to the Federal Reserve [and] present them with a well thought-out plan.”
DelGrosso took exception to the “well thought-out” part, noting that the bill was introduced a week before the end of the session and zoomed through three committees in 24 hours. Even those who testified on the 43-page bill during committee hearings acknowledged that they hadn’t read it, he said.
“The governor’s office comes down and pulls people out of committee, twists their arm to say, ‘Trust us, it’s a good bill, you need to vote yes,’” said DelGrosso. “Then suddenly all these members that were no’s are now yes’s because they’ve seen the light.”
House Speaker Mark Ferrandino (D-Denver) said that legislative action was needed to force the federal government’s hand.
“A study is not needed. We have studied this thing to death,” said Ferrandino. “We actually have to take some action so the federal government and the Federal Reserve bank will actually respond to what we are doing.”
Ultimately, said Waller, Congress needs to resolve the issue. The bankers’ association is supporting a bill by Rep. Ed Perlmutter to allow the marijuana industry access to the banking system.
“We still think it will take an act of Congress, which is what we’ve always said,” said Waller. “We are supportive of Congressman Perlmutter’s bill on this, although that doesn’t seem to be getting much traction federally.”