Pot-shop businesses in Colorado continue to face difficulties in gaining access to banking services, but the state legislature is seeking to change that.
Colorado has legalized recreational marijuana, but federal regulations still classify profits from these drug businesses as illicit funds, so banks remain wary of taking on customers who bring with them obvious regulatory risks. In response, Colorado legislators have voted to create a “network of uninsured cooperatives designed to give pot businesses a way to access basic banking services.”
At present, Colorado’s legal pot shops hold all their proceeds in cash, which makes them targets for criminals and money laundering and makes it difficult to conduct business with vendors, landlords, and so on. Additionally, the state government has an intense interest in auditing profits and levying taxes on these businesses, and that is much easier to manage when formal banking relationships and business practices are in place.
According to Kristen Wyatt of the Associated Press, the federal government announced in February that it would allow banks to accommodate some of these businesses under certain circumstances, clarity and confidence in regulatory latitude remain low and most banks remain disinterested.
Colorado’s governor is expected to sign the legislation allowing pot-shop businesses to create uninsured cooperatives, but it’s unknown whether such an effort would gain approval from the Federal Reserve to access payment systems.
