Marijuana Credit Co-Ops Approved In Colorado

Colorado continues to be at the forefront of marijuana legislation with the signing of HB 1398 into law. With the potential to affect the financial and legislative aspects of the cannabis issue, the law was signed into effect by Governor John Hickenlooper in the first week of June 2014. It effectively gave legal marijuana entrepreneurs the green light to create financial cooperatives that would essentially function as credit co-ops.

HB 1398 comes into effect in a country that is rapidly coming to terms with widespread legalization. At present, twenty-two states and the District of Columbia in the country have already legalized cannabis for medical use. Two of those states – Washington and Colorado – have gone even further and have legalized cannabis for recreational use.

One of the most significant challenges faced by those in the marijuana industry is the limitation of transactions to cash. The primary reason for this is that most banks in the country simply refuse to do businesses with companies in the marijuana industry, which in turn can be traced to the continued insistence of the federal government to classify marijuana as a controlled substance. This meant that although marijuana may be legal in certain states, it is still illegal as far as the federal government is concerned.

Before HB 1398 was passed, there have been some moves to mitigate the damage caused by the restriction to cash-only transactions. In February 2014, the Financial Crimes Enforcement Network of the Treasury Department in conjunction with the Justice Department released guidelines for the promotion of “financial transparency” in the cannabis industry. The guidelines were specifically intended to “mitigate” the negative effects of running a business limited to all-cash transactions.

MARIJUANA CREDIT CO-OPS APPROVED IN COLORADOMany feel that these developments have been a long time coming. In the first four months of 2014 alone, Denver police have registered more than forty separate incidents of theft and robbery involving cannabis businesses in the city. As Marijuana Industry Group executive director Michael Elliott said, everyone in the industry has had “nightmares about (the) issue”. In a statement published in May 2014, Elliot bemoaned the absence of basic banking services for the marijuana industry, saying that it was responsible for “serious issues” related to public safety and accountability.

Elliot admitted that HB 1398 was not likely to sole the current problems facing the marijuana industry. He did say however that it provided an opportunity for forward progress in the industry revolving around legalized cannabis. For Elliot as well as many others, the new law would encourage the formation of credit co-ops, and give businesses federally approved access to basic banking services such as checking and merchant accounts.

Others were not quite so optimistic. Colorado Bankers Association CEO and president Don Childears said that the law still would not grant owners of marijuana businesses access to the Federal Reserve System, which meant that the formation of co-ops was unlikely. For Childears, the new law would only let the federal government off the hook as far as providing banking access to the marijuana industry is concerned, instead passing on the responsibility to Congress.

About Brian Ellis

With 6 years' experience in business journalism, Brian is the person we turn to for anything related to the business of cannabis. His news coverage spans topics including marijuana business and finance. Brian's work features on, and