DENVER Medical marijuana is legal in 17 states, but the industry has a decidedly black-market aspect its mostly cash-only.
Colorado lawmakers considered a bill setting up a special cooperative-banking institution.
But the first-of-its-kind measure was defeated Tuesday. Lawmakers from both parties worried that because marijuana is illegal under federal law, states cant step in to help dispensaries and growers store and borrow money.
Im not sure this is a problem the state can solve, said the sponsor of the pot-banking bill, Democratic Sen. Pat Steadman.
Banks wont touch pot money. The drug is illegal under federal law, and processing transactions or investments with pot money puts federally insured banks at risk of drug-racketeering charges.
Colorados bill would have attempted an end-run around the federal ban by creating the nations first state cooperative-financial institution for dispensaries and growers to allow them to store and borrow money.
The proposal would have been a direct challenge to the U.S. Justice Department, which warns that all financial transactions involving pot money are illegal.
But many of Colorados 600 or so medical marijuana dispensaries, and hundreds more growers and associated industry workers, hoped for some state attempt to fix the problem of not being able to bank marijuana money.
Ive been kicked out of three banks, said Matthew Huron, owner of two dispensaries and an edible marijuana company in Denver. One of his shops, Good Chemistry, greets patients with a sign on the register, CASH ONLY.
Huron pays his bills with money orders. Hurons current bank, which he wont name, doesnt know the true source of his companys deposits. But without a checking account, Huron said he wouldnt be able to pay the required payroll tax for his 15 employees.
Small-business loans are also out of the question, Huron said. In order to build a warehouse to grow the marijuana he sells a requirement under Colorado law Huron had to grow pot during construction and sell the pot to make cash payments to finish the warehouse.
Its very cumbersome, the banking aspect, Huron said.
Cumbersome and dangerous. Dispensary robberies are rare, but the Denver-based Medical Marijuana Industry Group, which supports the legislation, reports that its members complain of being followed home, with some saying they have been victims of robberies they havent reported.
Marijuana businesses have large amounts of cash on their premises, a fact as widely known as the price of the product they sell.
It freaks everybody out, said James Laws, general manager at the Good Chemistry pot shop in Denver. Its off-putting when people come in and we have to say, Sorry, our ATMs down so you need to go down the street and get cash or we cant help you.
The bill up for debate in the state Senate Finance Committee Tuesday would set up a financial institution somewhat like a credit union.
Only licensed members of Colorados medical marijuana industry, or their patients, would have been eligible to join the Medical Marijuana Financial Cooperative.
Several Democrats in Congress, including Rep. Jared Polis of Colorado, have proposed federal legislation opening financial services for medical marijuana businesses in states where theyre legal. However, prospects are remote.
The truth is, this is just not something thats going to be addressed in this Congress, said Steve Fox, director of public affairs for the Washington-based National Cannabis Association.