Colorado Gov. John Hickenlooper signed a bill Friday designed to create the world’s first state-level banking system for legal cannabis companies, which have complained that their lack of access to basic banking services creates difficult and dangerous risks.
But the financial industry quickly cast doubt on whether the legislation will address issues faced by marijuana businesses in the state, where recreational pot became legal this year. Asked what it would accomplish, Colorado Bankers Association CEO Don Childears said: “Basically, absolutely nothing.”
“We don’t think it can be effective, and it can never get off the ground,” he said.
The bill allows legal marijuana shops to create a makeshift financial network that would help them gain access to credit and merchant services. A lack of access to banking has been the single biggest problem for Colorado’s recreational weed merchants, which have been legally operating in the state since Jan. 1. Forced to operate million-dollar businesses in cash, marijuana companies run the risk of robbery and face myriad logistical difficulties.
The problem with the bill is that it does nothing to change the reality that blocked pot shops from banks in the first place. Marijuana, which is classified as a Schedule I drug, remains illegal under federal law. As a result, financial institutions are wary of taking on cannabis companies as clients, even in states where some form of the drug is legal.
The legislation signed Friday allows pot businesses to petition the Federal Reserve for clearance. But even industry advocates acknowledge that the chances of obtaining a green light are slim. “It’s probably not going to work, but we’re trying,” said Mike Elliott, executive director of the Medical Marijuana Industry Group.
The point of the effort is simply to demonstrate that. The industry believes that the banking conundrum can only be solved in Washington—either by Congressional action, or by rescheduling marijuana as more and more states adopt permissive laws. The law signed Friday is an effort to show federal authorities whom Colorado officials have been petitioning for a solution that the state has done everything it can to resolve the issue.
“I don’t see anything coming out of it; it’s more symbolic than anything,” said Elan Nelson, who works in business development for Medicine Man, a legal retail shop in north Denver. “I think this starts the conversation. And if, for some reason, it works—great. We need this desperately.”