Pubdate: Fri, 02 May 2014
Source: San Francisco Chronicle (CA)
Copyright: 2014 Associated Press
Contact: http://www.sfgate.com/chronicle/submissions/#1
Website: http://www.sfgate.com/chronicle/
Details: http://www.mapinc.org/media/388
Page: C6

COLORADO REVIEWS BANKING RULES FOR POT INDUSTRY

DENVER (AP) - Colorado is trying again to set up the world's first 
financial system for marijuana in an attempt to move the pot industry 
away from its cash-only roots.

A bill that had its first hearing Thursday is prompted by frustration 
with recent marijuana banking guidance from the Treasury Department. 
Banks and the pot industry say the guidance is inadequate because it 
gives financial institutions no confidence that they can serve the 
marijuana industry without running afoul of federal law.

"This is cracking the whip and really sending a flare up to the feds 
to make sure that they understand that this is a pressing issue," 
said state Rep. Jonathan Singer, sponsor of the bill.

The measure would allow state-licensed marijuana businesses to create 
a financial co-op, sort of an uninsured credit union. The co-ops 
would be overseen by Colorado's Division of Financial Services and 
expressly prohibited from calling themselves "banks" or "credit 
unions," though they could provide credit and checking and other 
traditional financial services.

The pot co-ops also would have to comply with the new federal 
requirements on banking for the marijuana industry, including filing 
detailed reports to show that sales revenue is not ending up in the 
hands of criminal organizations.

State lawmakers tried but failed two years ago to set up a 
state-chartered bank for the marijuana industry. The effort was 
abandoned as unworkable.

"The banking issue is a huge problem," said state Sen. Pat Steadman, 
who sponsored the failed banking plan two years ago. Steadman said 
the problem has only grown, so he signed on for another effort.

"We want an audit trail. We want to know they're paying their taxes 
correctly. And when they're operating on a cash-only basis, that's a 
huge problem," Steadman said.

Banking services have been a top priority for the marijuana lobby for 
years in Colorado. Marijuana industry workers briefed lawmakers on 
the headaches of operating without a bank, saying they were scared to 
walk to their cars carrying large amounts of cash.

"It is very easy to see somebody get killed over this issue," said 
Michael Elliott, head of the Marijuana Industry Group. "It's really 
just a matter of time before something happens."

Elan Nelson, a business strategist for the Medicine Man dispensary in 
northeast Denver, told lawmakers the federal guidance has done little 
to alleviate the problem.

"We're not seeing any change whatsoever," she said. "A lot of my 
colleagues will call around to the banks periodically to see if 
anyone is taking their business. And the standard answer is simply, 
'No.' Nothing's changed. Nothing's been fixed."

Under the federal guidance, banks must review state license 
applications for marijuana customers, request information about the 
business, develop an understanding of the types of products to be 
sold and monitor publicly available sources for any negative 
information about the business.

The American Bankers Association has said banks will be comfortable 
serving marijuana businesses only if federal prohibitions on the drug 
are changed in law.
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