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
.
