The House last week passed an 11th hour marijuana banking bill, capping an eventful chain of events on that and other pot-related legislation during the final days of the session.
With the May 7 passage of House Bill 1398, Colorado is on its way to becoming the first state in the country to devise a financial system for marijuana businesses.
The bill creates a banking co-op system for pot shop owners, which would operate similarly to credit unions. Supporters of the bill say the legislation is needed because currently marijuana is a cash-only business that can open itself up to crime.
“Marijuana entrepreneurs have been taking risks all over Colorado in building one of the fastest growing economic sectors in the state,” said Sen. David Balmer, R-Centennial, a bill sponsor.
Yet the success of the co-ops will depend on whether the Federal Reserve approves the plan. If it does not, the businesses will not be able to set up checking or credit card services.
That's because marijuana is illegal under federal law and banks tend to shy away from businesses that deal with pot sales because of it.
Earlier this year, the U.S. Treasury Department gave banks the go-ahead to offer their services to pot business, with certain limitations. However, that move hasn't been enough to persuade leery financial institutions from taking on businesses that deal with a federally-outlawed drug.
The bill is a reaction to non-reaction on the part of Congress to deal with the issue of marijuana banking. Congressman Ed Perlmutter, a Democrat who represents Colorado's 7 congressional district, is co-sponsoring a bill in the U.S. House that would allow banks to provide services to businesses that deal with pot in states where marijuana sales are legal.
However, that bill isn't getting much traction in Congress.
“If the federal government was serious about tackling this problem, this bill would not be before you,” Balmer said.
The bill was nearly derailed on the last day of the session after the Senate tacked on a key amendment to the legislation the day before.
The amendment allows hemp farmers to be included in the co-op. Those who grow hemp — a type of Cannabis plant that is not used for drug consumption, but rather is refined to make products like clothing — told a Senate committee that they were also being turned away by banks.
“As far as the federal government is concerned, industrial hemp is also marijuana,” said Sen. Greg Brophy, R-Wray, who sponsored the amendment. “If we don't add this amendment, they will be the only business in Colorado that is effectively un-banked.”
The amendment caused the bill to receive opposition from the banking lobby, which did not want to include hemp growers as part of the mix. After much wrangling during a special conference committee, the House re-passed the Senate's version of the bill, which included the hemp amendment.
Democratic Gov. John Hickenlooper voiced his support of the bill to reporters the day after its passage.
“We're not sure it's going to work, but we know that doing nothing is not going to work,” the governor said. “If you really want to design a system and really want to do as much as you could to get organized crime and gangsters involved, you require all cash. That's a breeding ground for corruption.”
The banking bill wasn't the only piece of marijuana legislation that lawmakers took up during the last days of the session. One of those was a bill that requires pot-infused edibles — such as brownies or candies — to be specially marked so that it is clear that the food contains marijuana.
The motivation behind House Bill 1366 was to prevent the accidental consumption of marijuana on the part of children, who think that the food is simply a cookie or a piece of candy.
“There needs to be a way to distinguish Swedish Fish that have marijuana infused with THC and Swedish Fish that doesn't,” said Sen. Owen Hill, R-Colorado Springs.
The bill sets up a task force that will examine options as to what the edible markings will look like, before the Department of Revenue enforces the law.
The Senate passed the bill, as well as a separate piece of legislation that limits concentrate amounts in marijuana products.