Landowners leasing property to marijuana businesses could join the financial cooperatives under consideration by state legislators in a bill intended to solve the inability of that industry to get banking services.
House Bill 1398 on Tuesday passed the Senate on second reading, one step from making its way back to the House where new amendments — including a provision allowing non-marijuana businesses to join the coops — will be taken up.
A final Senate vote is scheduled for Wednesday, the last day of the legislative session. If the amended version is passed by the House, it would head to the governor’s desk where’s it’s likely to be signed.
But that doesn’t actually solve the problem, legislators agree.
“This will take some time, some work, but I am pleased now, post-Amendment 64, that we have support from bankers to set this into motion to set up the financial services industry lacking for this business,” Sen. Pat Steadman, D-Denver, said.
Amendment 64 legalized the recreational sale of marijuana in Colorado, which began Jan. 1. But those businesses have found it difficult to find banking services, with many shut-out because the product they sell is illegal under federal law.
HB-1398 sets up a credit-union-like cooperative where businesses involved in the marijuana trade can pool their resources and have checking accounts, loans and other services typical of a bank.
The measure, though, requires approval by the Federal Reserve Bank, which controls the nation’s money system. Without it, the cooperative concept — the first of its kind in the nation — would die.
A number of different amendments were made to HB-1398 in the Senate, the most notable an exception to the provision that only marijuana businesses could join the coops, giving landlords a funding source they can’t easily get from ordinary banks.
Industrial hemp farmers, those whose crop is deemed identical to marijuana that’s illegal under federal law, would be allowed to join, too.
“It’s too frightening to commingle the money from a hemp field with the money of a corn and wheat field,” Sen. Greg Brophy, R-Wray, said in offering the amendment. “If the feds were to seize one, they would seize it all.”
Several banks recently have demanded full payment on mortgages held on properties that lease to marijuana businesses, saying they are illegal enterprises under federal law and cannot be used as financial guarantees to repay the notes.
Landlords have had difficulty in finding new financing for their loans, facing foreclosure if they didn’t evict the tenants. Many have turned to high-interest, short-term loans from private money lenders.
Sen. Owen Hill, R-Colorado Springs, echoed detractors at the House of Representatives who voiced discontent that a complex and important measure was being ramrodded through the Capitol in the final days of the legislative session.
The legislature ends its current session at midnight Wednesday.
“Twenty-four hours from now, we’re done and it’s imprudent to push through a 45-page bill on an important topic that takes on banking laws, commerce and a number of other critical issues,” Hill said. “It’s simply too quick.”
Legislators wonder whether the required federal approvals will ever come.
“I’ve steadfastly maintained that the solution does not lie in this building, but in Washington,” Steadman said. “This is a bill we know is imperfect, but it’s something we’re trying to do to force a dialogue on the issue. The status quo for access to financial services is unacceptable.”
David Migoya: 303-954-1506, firstname.lastname@example.org or twitter.com/davidmigoya