In a Friday letter to top officials at both departments, both the state’s senators and four of its seven representatives asked the federal government to give advice to Colorado’s marijuana businesses on how to access the banking system.
“In crafting such guidance, your respective agencies should work with the various banking regulators to ensure that these retail stores and dispensaries have some degree of access to the banking system,” they write. “At the same time, this guidance should include sufficient safeguards to ensure that access to the banking system will not facilitate any form of money laundering or other illegal activities.”
The issue is rooted in a 1970 law, the Bank Secrecy Act, which regulates how banks must report and respond to transactions believed to be linked to illegal activity. Marijuana sales are sanctioned in Colorado by the state government, but they remain illegal federally, leaving banks and businesses in a legal limbo.
In their letter, the members of Congress say the issue raises “significant public safety concerns.” Since businesses are afraid to bank and banks are afraid to engage clients involved in the industry, some pot producers and sellers are forced to handle transactions in cash, making them targets for thieves.
In interviews in Denver last week, the issue was the most-cited concern among marijuana store owners, employees and industry representatives.
“Banking is the biggest outstanding issue we have right now. It has to be fixed,” Michael Elliott, executive director of the Medical Marijuana Industry Group, said outside Denver’s 3D Cannabis Center shortly after the first legal sales of pot began on New Year’s morning.
But about two thirds of his organization’s members still bank, Elliott said. They just do it discreetly. “I would describe it as a ‘don’t ask, don’t tell’ policy,” he said.
Businesses foresee a big boon from legal sales. Medicine Man, another Denver retailer, is doubling its 20,000-square-foot warehouse, while the owner of the 3D Cannabis Center said she expects her monthly revenue of $30,000 from selling marijuana for medical use to grow more than eightfold to $250,000.
At Medicine Man, private security guards from the Blue Line Protection Group managed crowds as they waited in line to purchase marijuana and related products. The new security business boasts 30 employees and 12 contracts with marijuana-related businesses seeking extra security, a spokesman said.
In their letter, the Colorado lawmakers also argued that allowing businesses access to banking will make regulating and taxing them easier. The letter was signed by Sens. Michael Bennet and Mark Udall, as well as Reps. Dianna DeGette, Ed Perlmutter, Mike Coffman and Jared Polis. All but Coffman are Democrats