With banks still on the sidelines, credit unions are taking the lead in offering financial services to the marijuana industry.
Thursday, Seattle-based Salal Credit Union announced it will become the second Washington credit union to accept growers and processors of marijuana as members. The first was Numerica Credit Union in Spokane.
Both are still waiting to open their first accounts openly linked to the cannabis trade.
But the big news is in Colorado, where legislators this week passed a bill that will create a new industrial credit union exclusively for those in the marijuana business. If the Federal Reserve Bank gives its approval. The Colorado deposits will not be insured, so that’s not likely.
The bill will take the state up another of the alleys that have taken marijuana legalization to the brink of … functionality.
Colorado and Washington officials want money generated by the marijuana business to find a home in a bank or other financial institution for several reasons. The more urgent are public safety – cash is too attractive an incentive for money laundering or robbery – and taxation.
The potential amounts in play by the end of 2015 blow the mind: estimates of $1 billion in Colorado; $1.5 billion in Washington. One business owner who scored one of only two licenses awarded this week for a Bremerton retail location sold out for $150,000, plus 10 percent of future sales, without ever opening the doors.
A bill that would have created a state bank in Washington for marijuana transactions went nowhere. In Colorado, where federal authorities in February seized $850,000 out of eight bank accounts and a safe deposit box, a solution to the cannabis cash problem is more pressing. Businesses were using nondescript names, or personal accounts, to conceal the source of the money while getting it out of harm’s way.
Accounts flush with $100,000 balances raise red flags, or should, but bank officials say they did not know the source of the money.
Notably, neither the Washington credit union nor the Colorado institution will be open to marijuana retailers, the operators most exposed to violence, skimming and any “suspicious activity.” Those accounts are considered problematic under guidelines issued by the Treasury and Justice departments in February.
Guidance comes and goes with administrations, and the clock is ticking on President Obama’s. Congressional legislation co-sponsored by Rep. Denny Heck, D-Wash., and a Colorado congressman would explicitly allow marijuana businesses access to the banking system. The bill has not gotten a hearing, and won’t until a few big states like California begin to show some interest.
The common-sense step of rescheduling marijuana so that it is no longer lumped in with heroin would stop a lot of this madness. In the meantime, Numerica and Salal will provide some shelter for growers and processors, and some transparency for an industry some are determined to keep in the shadows.
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