Colorado lawmakers have approved the world's first financial system for the marijuana industry, a network of uninsured cooperatives designed to give pot businesses a way to access basic banking services. The plan, approved yesterday, seeks to move the marijuana industry away from its cash-only roots. Banks routinely reject pot businesses for even basic services such as checking accounts because they fear running afoul of federal law, which considers marijuana and its proceeds illegal. The result: Pot shop owners deal in large amounts of cash, which makes them targets for criminals. Or they try to find ways around the problem, like drenching their proceeds in air freshener to remove the stink of marijuana and try to fool traditional banks into accepting their money.
The US Treasury Department said in February that banks could serve the marijuana industry under certain conditions. With the industry emerging from the underground, states want to track marijuana sales and collect taxes. It's a lot easier to do that when the businesses have bank accounts. But most banks have shrugged at the Treasury guidelines, calling them too onerous to accept marijuana-related clients. The bill would allow marijuana businesses to pool money in cooperatives, but the co-ops would only take effect if the US Federal Reserve agrees to allow them to do things like accept credit cards or checks. (Read more Colorado stories.)