Colorado legislators approve ‘pot banks’ to serve marijuana industry

Colorado lawmakers have approved the creation of the country’s first financial system that caters to the marijuana industry -- legal on the state level but not on the federal level.

The lack of federal authorization has inhibited pot-related businesses from using routine financial services offered by banks, which has created security issues.

Colorado’s House of Representatives gave final approval Wednesay to a bill that would create financial cooperatives, or commercial credit unions, designed to give pot businesses a way to access basic banking services. The bill passed after the House bowed to the Senate’s decision to include hemp farmers, who also have difficulty securing banking services.

The measure goes to Gov. John Hickenlooper, who is expected to sign it. But ultimately, the state’s action sets up a confrontation with federal regulators: The plan would be subject to their approval as well.

Colorado became the first state to allow recreational pot sales, which started Jan. 1. The state of Washington is scheduled to start its legalized sales in July.

When marijuana sales were illegal, it was a cash-only business for customers as well as for suppliers. Now that is legal in some places, businesspeople want to be able to access bank services like those in any other commercial enterprise. Banks, however, are reluctant to take on marijuana-related business because they are federal regulators will step in.

Large amounts of cash also create a security problem for the marijuana shops.

“We are very happy this legislation passed,” Andrew Freedman, the governor’s director of marijuana coordination, told the Denver Post. “This gives us an avenue to go to the Federal Reserve, and get cash off the street. That was by far our No. 1 priority.”