Colorado Marijuana Stores – Owners of legalized marijuana businesses in Colorado have a problem a lot of entrepreneurs envy. They are rolling in cash.
Marijuana has suddenly turned into a legal multi-million dollar business in the state. But the problem is Colorado marijuana stores are being rejected by banks.
Colorado Marijuana Stores Rejected By Banks
Banks don’t want Colorado marijuana stores businesses because of federal laws that prohibit banks, savings and loans and other lenders from dealing with them.
The marijuana stores are also prohibited from taking credit cards, checks and debit cards, which can limit sales. Having all that cash makes the marijuana shops a target for criminals.
Being cash only also makes it hard, but not impossible for the state of Colorado to tax marijuana-related enterprises.
The main rationale for legalizing recreational marijuana was to raise state taxes and to catch up with the times.
Legal marijuana sales are booming in Colorado. The state collected more than $6 million in taxes from the sale of weed in the first two months of going legal in 2014, according to the Colorado Department of Revenue.
Businesses are also expanding to meet the demand
The Medicine Man Denver pot shop is doubling in size because of all the new customers. Part of the reason business is so good is that people are traveling to Colorado from other states to buy pot legally.
Efforts are also underway to create a banking system for Colorado marijuana stores. Banks don’t like dealing with marijuana money because weed is illegal under federal law, but legal under Colorado law. State law trumped federal laws for decades until somehow the Feds started ignoring some state laws, and the U.S. Supreme Court intervened with a series of issues.
A Colorado state legislator proposed to set up a financial co-op within the marijuana industry, but fellow lawmakers quickly rejected the plan.
The proposal would have allowed dispensaries to create their own credit union. It cleared a House committee before being gutted in committee. “I don’t know whether this will take an act of Congress or an act of God at this point,” said Rep. Jonathan Singer, a co-sponsor of the bill.
Such cooperatives might not qualify for Federal Deposit Insurance Corporation insurance, and may also not be able to participate in electronic banking services.
What About The Federal Reserve?
The Federal Reserve would have to approve the cooperatives, and there is no guarantee the federal agency would do that. There’s a good chance the Federal Reserve and the Justice Department will reject a separate system.
The only other alternative marijuana retailers have for banking is some credit unions that provide them with certain services.
However, many credit unions won’t publicly admit whether they take marijuana money or not, probably to avoid damage to their reputations in the eyes of customers opposed to legalized pot.
The bizarre predicament that Colorado marijuana stores find themselves in shows some of the risks inherent for the new industry in the state that ironically is home to the “Mile High City.”
Starting a shop to sell weed might be easy, but finding a place to bank the money from it has turned out to be troublesome. Illegal pot dealers have run cash businesses for years, hiding their money from authorities, something that new pot shop owners just may have to deal with for years to come.