By Keith Coffman
DENVER (Reuters) – The Colorado legislature on Wednesday voted to create the nation’s first state-run financial cooperative for marijuana sellers, with the aim of giving newly legalized cannabis retail outlets access to key banking services through the U.S. Federal Reserve.
The approval of the so-called “cannabis credit co-ops” came on the final day of the legislative session, as lawmakers seek to address problems marijuana retailers face in having to operate on a cash-only basis, such as burglary threats.
The proposal’s chief sponsor, Representative Jonathan Singer, said the cooperatives are needed because traditional banks and credit unions have been hesitant to serve the burgeoning marijuana industry as long as the drug remains outlawed by the U.S. government.
“This is the final piece to our pot puzzle,” said Singer, a Democrat.
The final approval on Wednesday came after both chambers of the General Assembly cleared their own versions of the bill. The bill now heads to Democratic Governor John Hickenlooper for his signature.
Voters in Colorado and Washington state legalized the possession and use of small amounts of cannabis by adults for recreational purposes in 2012. Both states are among 20 that allow the use of cannabis for medical reasons.
The first recreational cannabis shops opened in Colorado in January, and Washington is set to follow suit later this year.
Singer said the cash-only nature of the industry makes pot businesses targets of crime, limits owners’ access to credit and capital and hinders the state’s ability to track revenues for tax-collection purposes.
Under the bill, the financial cooperatives would operate similarly to credit unions – without a deposit insurance requirement – and would be governed by the state’s financial services commissioner.
But to gain access to banking services such as credit card processing and checking accounts, the Federal Reserve would need to approve the plan, which critics say is unlikely in the absence of a deposit insurance mandate.
Republicans who voted against the measure said such complex legislation needed further study and should not have been rushed through the legislature at the end of its session.
The Obama administration in February issued new law-enforcement guidelines aimed at encouraging banks to start doing business with state-licensed marijuana suppliers, even though such enterprises remain illegal under federal law.
The guidance stopped short of promising blanket immunity to banks, and financial industry officials have said they doubted many banks would begin to accept cannabis suppliers as customers without changes in federal law.
Another bill headed to the governor’s desk allocates tax revenues derived from retail pot sales to marijuana enforcement, and to fund education programs designed to prevent youths from using the drug.
Also on Wednesday, Colorado legislators approved a requirement that cannabis-infused edibles be readily identifiable as containing THC, the psychoactive property in marijuana.
A bill to limit the amount of concentrates inside cannabis products also won passage this week, an issue that gained attention following two deaths possibly linked to the ingestion of marijuana products.
(Editing by Steve Gorman, Eric Walsh, Eric M. Johnson and Michael Urquhart)