Colorado’s Marijuana Financial System Unlikely To Solve Pot Banking Dilemma


In January 2014, Colorado became the first state in the Union to permit the sale of recreational marijuana. On May 7, 2014, Colorado made history again by passing the Marijuana Financial Services Cooperatives Act (the ‘‘Marijuana Co-op Act’’), which would create the world’s first marijuana-related financial system. Governor John Hickenlooper reportedly is expected to sign the bill into law. The Marijuana Co-op Act permits the creation of financial services cooperatives referred to as ‘‘cannabis credit co-ops’’) to provide financial services to the marijuana industry. The Marijuana Co-op Act was introduced, and ultimately passed, in response to the growing ‘‘cash only’’ problem facing the marijuana industry.

As the new marijuana industry took off, unforeseen complications emerged. Because the possession, manufacture and distribution of marijuana remain illegal under federal law, traditional financial institutions are largely unwilling to offer banking services to the marijuana industry out of fear of running afoul of federal regulations, including their anti-money laundering obligations pursuant to the Bank Secrecy Act. The marijuana industry’s lack of banking access creates a multitude of problems, not-the-least of which is the public safety concerns created by the ‘‘cash only’’ nature of the marijuana industry. In March 2014 alone the Colorado recreational marijuana industry’s sales nearly topped $19 million.5 With that amount of cash and nowhere to store it, pot shops are prime targets for robberies.

Originally Published in Bloomberg BNA's Banking Report - May 13, 2014.

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