Partygoers dance and smoke pot in front of the Colorado state capitol building at the annual 4/20 marijuana festival in Denver. (AP Photo/Brennan Linsley)

Marijuana is perfectly legal under Colorado law, but totally illegal under federal law.

As a result, the banking industry, which is federally regulated, is steering clear of anything to do with Colorado’s burgeoning marijuana industry. And that means the whole pot value chain – from grower to retailer to customer – is cash only.

In addition to making it harder for pot retailers to grow and manage a legitimate business, a cash-only enterprise is harder for the government to track for tax purposes and an easy target for criminals.

Wednesday, Colorado lawmakers took a first tentative step toward trying to do something about the anomaly. Rarely, if ever, have states confronted such a situation.

They approved a plan to setup a network of uninsured cooperatives that would offer basic banking services to pot businesses.

The so-called “cannabis credit co-ops” would function like credit unions, allowing licensed marijuana businesses to pool resources, have checking accounts and take out loans. The co-ops would be able to make investments on behalf of their members in municipal bonds and other securities.

Lawmakers from both parties supported the bill, which Colorado Gov. John Hickenlooper, a Democrat, is expected to sign into law.

But there’s a catch: The plan will only take effect if the U.S. Federal Reserve agrees to let the co-ops do things such as accept credit cards and checks. Critics of the bill say Fed approval is unlikely in the absence of a deposit insurance mandate.

The bill isn’t intended as a long-term solution, supporters say, but rather to force the federal government’s hand.

“I’ve steadfastly maintained that the solution does not lie in this building, but in Washington,” state Sen. Pat Steadman (D) told the Denver Post. “This is a bill we know is imperfect, but it’s something we’re trying to do to force a dialogue on the issue. The status quo for access to financial services is unacceptable.”

In February, the Treasury Department issued guidance allowing banks in states where pot is legal to do business with legal marijuana dealers. But some banks say the new guidelines, which include extra paperwork and filings, are too onerous. Others still worry they might run afoul of the law.

For one thing, nothing in the guidance protects banks if a new administration in Washington decides to prosecute state-licensed pot businesses for violating federal drug laws.

“This guidance doesn’t alter the underlying challenge for banks,” Frank Keating, president and chief executive of the American Bankers Association, told The Washington Post in February when the new Treasury Department guidance was released. “Possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution and assorted sanctions.”

“An act of Congress is the only way to solve this problem,” Don Childears, president and chief executive of the Colorado Bankers Association, said in February in a statement posted on the organization’s Web site.

“It is important that a solution be reached, and soon,” Childears said. “Banking services would greatly resolve state regulation and taxation issues, serve customers and businesses in legal transactions and help public safety.”