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Medical cannabis is legal in seventeen states, but the industry has the appearance of a black-market entity due to its cash-only transactions.
Lawmakers in Colorado have considered a bill that aims to set up a special cooperative banking institution.
However, the first-of-its-kind legislative measure was defeated on Tuesday. Democratic and Republican lawmakers are worried that since federal law consider marijuana as illegal, the states cannot step in to help growers and dispensaries to store or borrow money.
Democratic Sen. Pat Steadman, the sponsor of the marijuana banking bill, said, “I’m not sure this is a problem the state can solve.”
Banks will not touch marijuana money. Under federal law, the drug is illegal, and processing any transaction or investment with marijuana money places federally insured banks at the risk of drug-racketeering charges.
The pot banking bill of Colorado would have tried to have an end-run around the federal prohibition by establishing the country’s first state cooperative financial institution for pot dispensaries and growers to permit them to deposit and borrow money.
Such proposal would have the effect of directly challenging the U.S Justice Department, which has issued a warning that all financial transactions that involve marijuana money are illegal.
But most of the state’s six hundred or so medical pot dispensaries, as well as hundreds of growers and related industry workers, are hoping for some attempt by the state to resolve the issue of not being able to deposit marijuana money in a bank.
Matthew Huron, the owner of two marijuana dispensaries and an edible marijuana business in Denver, said, “I’ve been kicked out of three banks.” One of his marijuana shops, Good Chemistry, greets customers with a “CASH ONLY” sign on the register.