• 21
  • February
    2012

As discussed in previous posts, the owners of medical marijuana dispensaries throughout Colorado have grown understandably frustrated by the complete lack of state banks willing to conduct any type of business dealings with them.

Here, the banks are reluctant to conduct business with dispensary owners due to the simple fact that marijuana is illegal under federal law and banks are prohibited from working with any type of business that deals in illegal/illicit goods.

In an attempt to remedy this situation, Sen. Pat Steadman (D-Denver) drafted Senate Bill 75 (SB 75), which was designed to grant licensed dispensary owners the authority to create exclusive financial cooperatives for those in the medical marijuana industry.

However, the bill was recently defeated by the Senate Finance Committee by a vote of 5 to 2 -- much to the delight of prosecutors and law enforcement agencies throughout the state.

Among the concerns cited by the committee:

  • The legislation would likely violate a charter that the state of Colorado signed with the federal government mandating that all banks and financial cooperatives be insured. Specifically, the proposed financial co-ops of dispensary owners would likely be unable to find a willing insurer -- out of fear of federal action -- and, as such, the charter would be violated
  • The legislation was unclear on whether the cooperatives would issue checking accounts to members or some type of credit system
  • The cooperatives would not have access to insured federal banking reserves and would therefore be sitting on potentially millions of dollars in cash, presenting a security risk
  • The cooperatives would engender a false sense of security, perhaps leading some dispensary owners to make personal/family deposits that could someday be seized by the federal government

Sen. Steadman expressed concern even before the committee defeated SB 75 that the solution to this problem was far from clear.

"This was my best attempt," he said. "With or without this I think there's still going to be problems, and despite all of our thoughtful questions and all of the testimony and all of the people that showed up, I don't know that we really can solve this problem."

State legislators have long been frustrated with the hesitancy of banks to conduct business with the medical marijuana industry.

The concern is that the inability to secure legitimate banking services will cause dispensaries to adopt a cash-only model, thereby frustrating legislative efforts to regulate accounting practices and create greater transparency in the medical marijuana industry.

It is worth noting, however, that many dispensary owners are equally disheartened by having to adopt a cash-only model, fearing it exposes them to unnecessary danger.

"There are people here even in this room who I know have been victims of crime because of this very issue..." said Mike Elliott, executive director of the Medical Marijuana Industry Group. "This is not something that people want to talk about, that they're dealing in large amounts of cash."

Stay tuned for more news from our Denver criminal defense blog ...

This post is provided for informational purposes only and is not to be construed as legal advice.

Source:

The Colorado Statesman, "Bill pushed by medical marijuana industry goes to pot" Feb. 20, 2012