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Congress has stalled on marijuana banking, so Colorado is taking matters into its own hands

Gov. Jared Polis is ordering his administration to use state legislative and regulatory change to help increase the number of banks working with cannabis businesses by 20%.

Automated fans and cultivation lights are pictured operating above cannabis plants at RiNo Supply's cultivation facility near Lafayette on Thursday, Dec. 13, 2018. (Andy Colwell, Special to The Colorado Sun)
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Colorado is taking action to try to give more legal marijuana businesses in the state access to banking as a Congressional effort to knock down the federal barriers has stalled

There are already a handful of banks in Colorado working with marijuana businesses, including Partner Colorado Credit Union in Arvada, where Gov. Jared Polis on Monday unveiled a roadmap to increase the number of financial institutions offering their services to the cannabis industry by 20% in the coming months.

But many more banks won’t work with cannabis businesses because of the potential regulatory and criminal consequences, since pot is still illegal under federal law. That has left many marijuana companies without access to everything from checking accounts to loans.

“We have an obligation to do what we can with the tools that we have while we work on this federal fix,” Polis said.

Polis is ordering his administration to identify opportunities for state legislative and regulatory clarity for state-chartered financial institutions, state-licensed money transmitters and state-regulated insurance companies. The idea is to create a path for more bank-cannabis businesses relationships by ensuring financial institutions know Colorado has their backs if they decide to take the risk.

Colorado Treasurer Dave Young, Colorado Department of Regulatory Affairs Executive Director Patty Salazar and U.S. Rep. Ed Perlmutter, D-Arvada, are working with Polis on the effort.

“This just reiterates our commitment,” Salazar said.

The state says it cannot disclose how many financial institutions are offering their services to marijuana businesses, but the Colorado Bankers Association told The Colorado Sun last year that it may be as many as 35.

The limited number of banks that do work with marijuana businesses are only willing to take on a small number of clients, and their fees are high because of the regulatory burden.

Banks that do work with marijuana companies in Colorado often make them sign nondisclosure agreements to avoid scrutiny. 

Financial institutions are able to remain in regulatory compliance, albeit gingerly, under guidance provided in 2014 by the U.S. Treasury Department’s Financial Crimes and Enforcement Network, but federal prosecutors could still intervene

“As federal prosecutors, we will never tell them that what they are doing is lawful under federal law,” Colorado’s U.S. Attorney Jason Dunn told The Sun in October. “There’s always a risk, just like a retail marijuana business in Colorado, that they face federal prosecution.”

MORE: Congress is weighing whether to give marijuana businesses access to banks. In Colorado, that’s already happening. 

But making marijuana businesses operate without access to banking products also has its risks. Polis said lack of access to banking poses both an economic and public safety threat to the legal industry. 

Pot companies are almost exclusively cash businesses because of their inability to use financial institutions. There have been burglaries, robberies and even a homicide at legal marijuana shops as a result.

“Furthermore, cannabis businesses have been blocked from traditional financial products — like lines of credit, loans — that would help businesses grow,” Polis said.

Partner Colorado Credit Union President and CEO Sundie Seefried lauded the roadmap as another positive step toward ensuring the cannabis industry has the banking access it needs. Safe Harbor, the division of Partner Colorado Credit Union that handles marijuana businesses’ accounts, has been growing rapidly — a sign that there is demand for pot financial services. 

 “Safe Harbor is now banking in excess of $200 million a month of cannabis-related funds, and that money only continues to grow,” Seefried said.

Partner Colorado Credit Union in Arvada is one of the few financial institutions willing to take the risk to work with the cannabis industry. Pictured is its headquarters on Monday, Feb, 3, 2020. (Jesse Paul, The Colorado Sun)

Meanwhile, there continues to be a push for a federal overhaul that would make efforts like the one announced Monday by Polis unnecessary.

The SAFE Banking Act, which cleared the U.S. House last year with bipartisan support and is being spearheaded by Perlmutter, would shield banks and credit unions from prosecution for handling legal pot money.

It’s now awaiting debate in the Senate, where Colorado’s Republican U.S. Sen. Cory Gardner is championing the bill, but is unlikely to move forward anytime soon.

That’s because Senate Banking Committee Chairman Mike Crapo, R-Idaho, has said he’d like to see a potency cap for the products sold by marijuana businesses that want access to banks. The cannabis industry sees that as a nonstarter because it would dramatically limit what they could sell, effectively killing the legislation without a compromise.

Perlmutter is still optimistic. “We are working with Sen. Crapo, who has given his roadmap of things he’s concerned about,” he said. “We can work with any of his particular points. We expect movement on that bill.”

U.S. Rep. Ed Perlmutter, D-Arvada, speaks at a news conference announcing Colorado’s roadmap to encourage more financial institutions to work with the cannabis industry on Monday, Feb, 3, 2020. (Jesse Paul, The Colorado Sun)

The SAFE Banking Act has been in the works in Congress since 2013.

“Thankfully, Colorado is, sort of, minding the store while we’re trying to get this resolved at the federal level,” Perlmutter said.

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