Six high-profile lawmakers from Colorado’s congressional delegation are urging swift action from the federal government to allow marijuana-related businesses access to basic banking services. Democratic Sens. Michael Bennet and Mark Udall, along with fellow Democratic Reps. Diana DeGette, Ed Perlmutter and Jared Polis and Republican Rep. Mike Coffman, sent a letter Friday two federal officials, requesting guidance for marijuana businesses and banking regulators “in the most expeditious manner possible.” They addressed the letter to Jennifer Calvery, the director of the Financial Crimes Enforcement Network — a bureau of the Department of Treasury that analyzes financial data to mitigate against illicit use and money laundering — and the Department of Justice’s Deputy Attorney General James Cole.
Currently, marijuana businesses aren’t allowed to set up legal bank accounts because the federal government still considers marijuana to be illegal. Worried banks fear that they could be implicated as money launderers if they offered traditional banking services to the pot businesses.
Additionally, marijuana-related businesses often cannot even accept credit cards for transactions, and some do not have simple checking accounts and are forced into cash-only transactions, which can put the retailers’ safety at risk and can be burdensome for other issues, such as taxes and employee payroll.
The legal retail sale of marijuana in Colorado is off to a strong start, revenue-wise, with approximately $5 million in sales in just the first week alone from the less than 40 shops that were able to open by Jan. 1, the day the law legalizing the sale of marijuana went into effect. This is just a fraction of the more than 500 total marijuana dispensaries in the state that are at least eligible to apply for a retail marijuana sales license.
The legal marijuana industry — whether medical or recreational — is expected to grow to $2.3 billion in 2014 in the U.S. In five years, it could balloon to a $10 billion industry nationwide.
“The possibility of a cash-only system has raised significant public safety concerns for customers and employees who must now handle and transport large quantities of cash,” the letter reads. “Additionally, a cash-only system may make it more difficult for the state and federal government to regulate and audit these facilities. Finally, without access to the banking system, it may become easier for retail stores to avoid sales tax collections, which would diminish funding for marijuana enforcement activities and Colorado school construction.”
Last November, Colorado voters approved a 25 percent levy on retail marijuana sales in the state — a 15 percent excise tax and a 10 percent sales tax. The first $40 million raised from the excise tax is flagged for use in state public school construction; the 10 percent sales tax will be used to help fund the state’s regulatory system.
Mike Elliott of the Medical Marijuana Industry Group told The Huffington Post that the single biggest problem facing Colorado marijuana shops now is their lack of access to banking services. “This is a particularly frustrating issue,” Elliott said, “because it really is the forces outside of Colorado interfering with our program, and in so doing, by jeopardizing banking, it’s creating awful safety and accountability issues.”
Just last week, the Denver City Council, in a surprising unanimous vote, urged federal regulators not to penalize banks that do business with state-legalized marijuana shops.
On a national level, last year Perlmutter introduced the proposed Marijuana Business Access to Banking Act, and Polis cosponsored the legislation (HR 2652).
HR 2652 would create protections for banks that offer services to state-sanctioned marijuana businesses. Polis spokesman Scott Overland explained it would also prohibit a federal banking regulator from terminating or limiting the deposit insurance of a depository institution solely because it either provides or has provided financial services to a marijuana-related legitimate business. Additionally, the measure would also block federal regulators from prohibiting, penalizing, or otherwise discouraging a depository institution from providing financial services to a marijuana-related legitimate business.
Polis, one of the Friday letter’s signees and a vocal supporter of marijuana legalization in the state and at the federal level, has also sponsored HR 499, the Ending Federal Marijuana Prohibition Act, which would remove marijuana in any form from all schedules of controlled substances under the federal Controlled Substances Act.
“I am proud to join with other members of Colorado’s Congressional Delegation in pushing the Department of Justice to grant marijuana businesses access to federal banking institutions,” Polis said in a statement to The Huffington Post. “When a small business, such as a marijuana dispensary, can’t access basic banking services they either have to become cash-only — and become targets of crime — or they’ll end up out-of-business. In states that have legalized marijuana, and for businesses that have been state-approved, it is simply wrong for the federal government to intrude and threaten banks that are involved in legal transactions.”
DeGette is the sponsor of HR 964, the Respect States’ and Citizens’ Rights Act, which would amend the federal Controlled Substances Act to provide that the federal marijuana prohibition would not preempt states’ laws regarding the drug.
“I have heard too many stories of employees carrying around bags full of cash, fearful for their safety and the safety of others,” DeGette said to HuffPost Monday. “I think it is clear that access to the banking system would benefit my constituents and improve oversight of the industry.”
The Wall Street Journal recently reported that the Department of Justice is also currently drafting legal guidance on how banks can work with marijuana businesses in states like Colorado and Washington, both of which legalized recreational marijuana for adults 21 and over.
Last month, Jack Finlaw, Colorado Gov. John Hickenlooper’s (D) chief legal counsel, said that marijuana businesses may not get a full green light on banking rights, but that they are likely to get a “yellow light” in the first quarter of 2014.
Just last week, DeGette sent an email to her supporters praising her state’s first week of recreational marijuana sales.
“It was a big week in Colorado,” DeGette wrote. “Across the state, recreational marijuana was sold for the first time. And guess what? The world didn’t end.”
This piece has been updated to include further comment from DeGette.