Colorado's marijuana shop owners and growers looking to draw on credit or open bank accounts for their businesses will likely have to wait on those plans a bit longer despite an announcement last week that the Obama administration is trying to make it easier for banks to work with them.
Attorney General Eric Holder said on Thursday that he's working on guidance to federal prosecutors, instructing them not to prioritize cases against marijuana businesses in states where it's legal.
But Don Childears, CEO of the Colorado Bankers' Association, says that in order for banks here to feel comfortable working with marijuana businesses, more input from the federal government is necessary.
"I think they'll need to see more than the Attorney General's office can deliver," Childears says.
Guidelines for prosecutors wouldn't change the fact that using, selling and growing marijuana is still illegal under federal law, so banks would be risking insurance under the Federal Deposit Insurance Corporation, effectively ending the ability to bank.
And federal bank regulators are mostly outside of the executive branch of government, meaning they wouldn't be subject to the Attorney General's guidance.
But marijuana businesses around Colorado are asking for a solution to their banking issues but, so far, most banks have refused to do business with store owners.
What remains is an economic system that relies entirely on cash that is usually stored in a safe.
Northern Lights Cannabis Company owner Mitch Woolhiser says his safes are considered “burglary-proof for up to 30 minutes" -- even if a burglar has tools like a blow torch.
And the safes, according to Woolhiser, are located in a secure place.
"It has motion detectors, silent alarms, burglar alarms and other things that aren’t so obvious," Woolhiser says.
Attorney General Holder cited the dangers caused by piling up millions of dollars in cash in an announcement last week.
"There’s a public safety component to this," Holder said. “Huge amounts of cash, substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited, is something that would worry me, just from a law enforcement perspective.”
But Woolhiser says security isn’t the only problem when it comes to his money.
"There’s no access to the banking system for credit," Woolhiser says. “Everything has to basically be personal financing, loans from friends, that sort of thing.”
In the past few years, Childears says some banks have unwittingly signed up marijuana businesses as customers, prompting regulators to quickly step in and instruct the bank to end their relationship with that business.
The banks think they are dealing with another kind of small business.
“In time, through the smell of the money, which is literally one way it's detected, they figure out the nature of the business," Childears says.
In other words, the money smells like marijuana.
"I've also heard that now, some marijuana businesses trying to escape that use Febreze or something else on the money before it's deposited," Childears adds.
Representative Ed Perlmutter, a Democrat from the North and West suburbs of Denver, has proposed letting banks work with marijuana businesses in states where the drug is legal.
Childears says it's unlikely the bill will pass through the Congress but approval of such measure would likely help bankers feel more comfortable working with marijuana businesses.
The measure has bipartisan support mostly from Washington and Colorado including Republican Representative Mike Coffman from East of Denver.
In Washington state, a group of state lawmakers are proposing to establish a state bank that would deal with all the marijuana business.
Childears says that's been considered in Colorado in the past but even a state-owned bank couldn't access the payment system.
It would help, however, with the security risk marijuana business owners face by keeping cash on-hand.
Childears says an act of Congress is likely the only thing that will change how bankers deal with marijuana businesses in Colorado.
For that to happen, Childears says banks would have to pressure Congress to take action or lawmakers would have to change the current Federal law around controlled substances.
"At some point, you reach a tipping point in Congress where people are willing to move ahead and amend the Controlled Substances Act," Childears says.