Colorado lead the nation with being the first to legalize and regulate cannabis for adults, and the state may be the first to solve the cannabis banking question.

Cannabis businesses have a difficult time obtaining and keeping regular bank accounts due to federal prohibition, including those businesses in Colorado. Banks have been hesitant to get involved on a large scale, though the number of banks working with cannabis businesses grows every year. The hemp industry has the green light to bank as well, but that leaves 70% of all cannabis businesses uninsured. For a multi-billion dollar industry, that’s a problem. And not just because the IRS doesn’t know where to put all the cash. 

Colorado is looking to change that relationship between cannabis businesses and financial institutions. While at the federal level U.S. Treasury Secretary Steve Mnuchin has stated it will take an act of Congress to change the cannabis federal banking regulations, Governor Jared Polis isn’t willing to wait that long. Polis and the Colorado Department of Regulatory Agencies (DORA) announced a roadmap to develop new guidelines for banks and credit unions to work with cannabis-related business. 

Clarity is much of what the banking industry has been looking for when it comes to working with cannabis-related businesses but hasn’t received at the federal level. Polis and DORA hope the regulatory guidance they have provided will make financial institutions more comfortable and willing to work with the industry. 

Still, the state effort is limited. Any larger banks that operate in multiple states will have to answer to the federal government, not just the states. But smaller banks that are completely within the state would have more protection if state guidance was offered. 

“The Roadmap to Cannabis Banking and Financial Services” is a 13-page PDF document designed to be understandable, with a clear vision outlined on the front that includes creating a regulatory landscape where the cannabis industry has as much access to banking as any other industry. Specifically, the report has 7 steps in its roadmap: 

1. Establish Working Group: This leadership group will meet to kickstart the process.
2. Increase Transparency: Much of this focuses on internal coordination on the state side between departments.
3. Engage Trade Associations: Hiring an innovations strategist and talking with Colorado banks to learn more about their relationship with cannabis businesses.
4. Encourage New and Emerging Technologies: This involves issuing an Interim Regulatory Guidance for Virtual Currencies and passing several acts including the Colorado Money Transmitter Act and the Trust Companies Act that will give guidance to the public and the industry.
5. Provide Regulatory Guidance: This is where the regulatory clarity comes in regarding the state’s expectations and requirements. 
6. Reduced Barriers to Entry While Upholding Guardrails for Consumer Protection: Evaluating state requirements for chartering and licensing a state-chartered bank. 
7. Demonstrate Support: The final step is submitting letters of support to other state bank regulators in favor of ending federal prohibition. 

Several bills have been held up in Colorado’s Congress regarding cannabis in recent years. Will this roadmap prove to be the movement the industry needs? Let us know what you think in the comments.