In May, Colorado legislators approved House Bill 1398 to create an alternative banking system for companies doing business in the marijuana and hemp sectors. These “cannabis credit co-ops” will operate similarly to credit unions; businesses will form a cooperative financial services entity to manage their funds. However, in order to be a viable financial institution (in practical terms, to provide credit card processing or checking accounts), each cooperative must have access to the federal reserve system, controlled by the Federal Reserve Bank. Industry representatives expect that the Federal Reserve Bank will not permit this access to cannabis credit co-ops without deposit insurance, such as that provided by FDIC or NCUSIF. This insurance is not required in the legislation, and most likely will be inaccessible to these fledgling co-ops through usual (federal) channels. Governor John Hickenlooper is expected to sign this bill, although the banking lobby’s request for a veto may carry some weight.
Given the Federal Reserve Bank's influence on this process, this may not prove to be the solution for Colorado’s cash-heavy marijuana businesses, but it will force the conversation to move forward in federal circles.
On a side note, the Numerica Credit Union has generated interest in eastern Washington State, as the first financial institution to publicly work with marijuana businesses. This Spokane-based credit union is willing to serve only producers and processors – not retailers – and they are subject to several limitations regarding proximity to a branch, account size and account access. In addition, the account holders will not be eligible to use the credit union network and will not be issued debit or credit cards.
In western Washington state, Salal Credit Union recently announced that it also has plans to provide bank accounts for producers and processors – once again, not retailers. Salal Credit Union began by opening trial accounts for a few licensed marijuana businesses in mid-May, with the goal of offering similar services to others in King, Snohomish and Pierce counties as the licensing process continues.