But it turns out that hundreds of the state’s pot businesses are already working with financial institutions under the close watch of federal regulators, even though marijuana remains illegal at the federal level. As many as 35 banks and credit unions offer services to the industry that has made $6.5 billion in sales in Colorado since 2014, according to the Colorado Bankers Association.
Most financial institutions are secretive about their business relationships with companies that grow and sell marijuana legally, limiting the number of customers they will take on and asking their clients to sign nondisclosure agreements, said Amanda Averch, a spokeswoman for the bankers association.
“They’re serving this business, effectively, anonymously,” she said.
Legislation that passed the U.S. House with broad bipartisan support last week, and championed by Colorado’s Democratic U.S. Rep. Ed Perlmutter, aims to bring marijuana banking into the mainstream, providing permanent federal protections for financial institutions that choose to work with the pot industry.
Cannabis business now are almost exclusively cash enterprises. The so-called SAFE Banking Act would allow them to accept credit cards from customers and apply for and receive loans. It also could make the cannabis banking market more competitive, potentially driving down the higher fees marijuana businesses now are charged.
“There are a couple institutions doing a lot, but not a lot of institutions doing much,” Perlmutter, of Arvada, told The Colorado Sun on Monday.
Here’s how things work now: Banks that want to work with legal marijuana businesses and meet regulatory compliance do so under guidance provided in 2014 by the U.S. Treasury Department’s Financial Crimes and Enforcement Network.
What the guidance doesn’t do is shield banks from criminal liability. Since marijuana is still illegal on the federal level, they are technically laundering any money deposited by pot businesses.
If the guidance was rescinded, the bank or credit union could be subject to fines. “If the guidance was revoked, just like the Cole Memo was revoked, there would be nothing,” Perlmutter said. “Part of the purpose of the legislation is to put it into place, into law, so it can’t be revoked from one administration to the other.”
Sundie Seefried, CEO and president of Partner Colorado Credit Union and a pioneer in marijuana banking, has been working with legal cannabis businesses since January 2015. The credit union now has about 400 clients in the industry, including companies that grow and sell cannabis, as well as ancillary-service providers.
She has been training other financial institutions to follow her lead and says she knows of 12 to 15 in Colorado that are already working with legal pot businesses.
The Colorado Bankers Association’s estimate of up to 35 financial institutions serving the marijuana industry is based on conversations with banks and credit unions, but the number fluctuates.
The Financial Crimes and Enforcement Network declined to comment for this story and said that it doesn’t track how many financial institutions are working with the marijuana industry in each state. The Colorado Department of Regulatory Agencies also said it doesn’t track the number.
Banks are working with the legal marijuana industry in other states, as well, said Morgan Fox, a spokesman for the National Cannabis Industry Association in Washington, D.C. But he says the costs to pot businesses are so high, because of a lack of competition, that for companies it’s not feasible. Cannabis companies are charged higher fees for services such as checking accounts and armored vehicles to transport their cash.
“I think that it’s happening in most states, but at such a small level that it doesn’t even begin to make a dent in the banking needs of the industry,” Fox said.
In Colorado, banks have waitlists of marijuana industry customers, Averch said. “One drops out and another one drops in.”
Terrapin Care Station, a marijuana retailer with six Colorado stores and a distribution network in Pennsylvania, says it has a banking relationship in Colorado, but declined to say with whom they work.
If the SAFE Banking Act were to become law, customers and cannabis businesses would have more options when it comes to purchasing pot and finances, Terrapin Care spokesman Peter Marcus said. It also would allow the industry to move money across state lines and potentially quash investor fears about federal action,
“You’re adding an extra comfort level and security to investors both in and out of the state of Colorado to get involved with cannabis companies and help those cannabis companies expand with a national footprint,” he said.
But the SAFE Banking Act, which cleared the House on a 321-103 vote, still needs to pass the U.S. Senate and be signed into law by President Donald Trump. The legislation has been six years in the making.
Perlmutter is optimistic about its chances, even with impeachment proceedings looming large over the current Congress. He notes that the SAFE Banking Act cleared the House in the heat of discussions about trying to remove Trump from office. “If we can do it then, we can do it,” Perlmutter said.
Republican U.S. Sen. Cory Gardner of Colorado is one of the measure’s lead sponsors in the higher chamber. He said its passage out of the House represents Congress’ taking its “head out of the sand.”
Perlmutter says the bill really boils down to public safety, citing dispensary robberies — including a fatal one in Aurora — by criminals lured by the promise of large stockpiles of cash.
“This is the first time any marijuana legislation has gotten a full hearing, a markup and passed one house or the other ever since marijuana was made illegal,” he said.