Fed regs make rec pot unbankable industry
Last Updated: 13:23 January 20, 2014
It’s still illegal for any bank to do business with any marijuana company, much less the 136 now-legal, state-licensed, recreational marijuana dispensaries in the state. So it makes sense that bankers – all of whom are regulated by the federal government - might be a little circumspect in what they said.
Among themselves however, bankers hope the federal government addresses the issue soon, said Mary Jane Rogers, a regional small-business spokeswoman at JP Morgan Chase & Co., which has 13 bank branches in the Boulder Valley.
Bank representatives at FirstBank Holding Co., which has 11 branches in the Boulder Valley, and Wells Fargo, which has 14 branches, agreed.
Colorado Congressman Ed Perlmutter has introduced the “Marijuana Business Access to Banking Act” to try to resolve the issue, said Leslie Oliver, Perlmutter’s policy and communications director. Perlmutter, D-Lakewood, said he has bipartisan support from 16 others in Congress, including several in Washington state, where pot also is legally sold. Perlmutter represents a northwest swath of the Denver metro area, including Arvada and Lakewood.
Not allowing pot companies to have bank accounts creates public safety concerns, Oliver said. It’s also hard to make the companies accountable for the taxes they’re supposed to pay on their sales, she said.
“Let banks be banks, and let businesses conduct regular business activities,” Oliver said. “It’s becoming a public safety concern with businesses operating in a cash-only setting.”
So far, the bill is still in the financial services committee, and no hearings have been scheduled, Oliver said.
The Colorado Bankers Association is neutral in the banking/pot company issue, but some members have said they’re interested in working with the marijuana industry, said Jenifer Waller, senior vice president at the Colorado Bankers Association. The industry trade group represents about 90 percent of all banking assets in the state.
“If the law is changed on the federal level, I think you will see a number of banks eager to bank the industry,” Waller said.
Most bankers in Colorado are very cautious, however, since any bank could be liable for money laundering activity if a legal recreational marijuana company was found to be involved in any illegal activity, Waller said.
Even debit and credit cards are a worry – since funds from those companies must be deposited into bank accounts, Waller said. Some retail pot stores in Denver reportedly are ringing up credit transactions.
And companies that grow or sell pot are reluctant to discuss banking relationships if they have them, Oliver said, making it more complicated when it comes to creating regulations.
“I don’t know how (the businesses) are doing it … or if the banks know what the businesses are that they’re working with,” Oliver said. “They don’t want to jeopardize it.”
In Boulder County, O Limited, doing business as The Canary’s Song, in Nederland is the only marijuana dispensary so far to receive a state license to sell recreational marijuana. Business representatives are slated to go before the Nederland board of trustees on Tuesday, Jan. 21, to request a retail marijuana license, according to Michele Martin, Nederland’s town clerk. The Canary’s Song could receive approval from the town board that night to start selling recreational marijuana on Wednesday, Jan. 22, Martin said.
The Canary’s Song representatives did not return a call requesting comment about if the company has a bank account. The store operates as a medical marijuana dispensary. At least one other medical marijuana store in an unincorporated part of Longmont has applied for a state license.
To receive state licenses to sell recreational marijuana, existing medical marijuana stores paid additional licensing fees and employees went through financial and criminal background checks.
Sushi and Mary Jane
Hapa Sushi, a Denver restaurant chain with a location in Boulder, has not been shy in marketing its new “pairing menu” that suggests certain types of sushi to go with certain strains of pot, said Mark Van Grack, owner of the Hapa Group Inc. The pairing menu may list marijuana as a “joke,” but Hapa is not selling it at any restaurants, Van Grack said.
But the marijuana marketing campaign created a small uptick in Hapa business in the last week, Van Grack said, declining to give specific numbers.
“In my opinion, Colorado tourism will see an uptick in business (from marijuana sales). And if there’s an uptick in tourism, it will be good for everybody,” Van Grack said.
Beth Potter can be reached at 303-630-1944 or email@example.com.