Stories
Slash Boxes
Comments

SoylentNews is people

posted by Blackmoore on Wednesday December 17 2014, @07:00AM   Printer-friendly
from the money-money-money dept.

The Center for American Progress reports

Nearly a year after Colorado's first legal marijuana shops opened, the thriving industry's biggest problem is deciding what to do with all of its cash. Now, the state banking commission believes it has found a way to free pot entrepreneurs from the regulatory haze between federal banking laws, Drug Enforcement Agency (DEA) policy, and the state's right to experiment with legalization.

The nation's first bank for marijuana pushers, growers, and investors will open in January after Colorado's banking regulators approved a charter for The Fourth Corner Credit Union.

The first-of-its-kind bank will allow state business owners to move away from relying on cash for every transaction. Business has been very good for marijuana sellers since the state's carefully designed legalization regime came online in early 2014, but traditional banks have refused to do business with the industry for fear of inviting punishment from regulators that are required to enforce the federal prohibition on the drug.

[...]Colorado's banking regulators came to view [the problem of mounds of cash] as justification for approving a pot bank. Their rationale hinges on a detail from the Department of Justice's 2013 announcement that prosecutors should scale back prosecutions of marijuana offenses and stop pursuing cases against pot businesses that operate in compliance with their state's drug laws.

This discussion has been archived. No new comments can be posted.
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
  • (Score: 0) by Anonymous Coward on Wednesday December 17 2014, @07:35AM

    by Anonymous Coward on Wednesday December 17 2014, @07:35AM (#126789)

    Or do your banking in Uruguay, which also has legal weed.

    Alternatively create a local currency. Have the Franklin Mint or some such make "Colorado Coins", then pay for your stash with Colorado Coins. Eventually other kinds of merchants will accept Colorado Coins, some employees will opt for getting paid in Colorado Coins.

    There are lots of communities that have such local currencies.

    We did an economics experiment in sixth grade, where we were all paid each day in play money. I decided to be a merchant. I ended up owning just about everything my classmates wanted to buy, as well as having buttloads of play money - much like owning all the hotels in Monopoly.

    • (Score: 1, Insightful) by Anonymous Coward on Wednesday December 17 2014, @08:20AM

      by Anonymous Coward on Wednesday December 17 2014, @08:20AM (#126795)

      You need to graduate your economics theories out of the sixth grade.

      • (Score: 0) by Anonymous Coward on Wednesday December 17 2014, @02:22PM

        by Anonymous Coward on Wednesday December 17 2014, @02:22PM (#126863)

        Wow no kidding. You can create your own coins. Go for it. Good luck getting anyone outside of your small group to use them. You will also need to find ways to turn your coins into federal dollars to pay your taxes. Good luck with that too as most people will see your coins as junk. Bitcoin pulled it off for awhile because it hit the news rags and got pumped up. In a few years people will go 'bitcoin how retro'.

        On top of that, for this story. That bank is on fairly shaky ground. It is basically a bank that deals with startup small mom and pop companies.

        Several things to consider with a bank.

        One the stability of its loans. Is whom they are loaning money out to stable. Can they repay?

        They could easily be wiped out by changes of the law. Dont think it could happen? Several European countries that were quite liberal with it have started to reign it in quite a bit. The people of colorado could decide 'yes this money is cool but the social cost we are incurring sucks'.

        Small businesses are inherently unstable their first few years. Many fail outright. Because frankly most people suck at running a business. They usually pick a business *they* would like. Not what their customers like. Ignoring your customers is a straight ticket to bankrupsyvile. Or they find that instead of working 8-9 hours a day they are now doing 14 a day 7 days a week to make ends meet. Oh dont get me wrong there will be some home runs. But I predict a good 80-90% of those stores are gone by next year (replaced by a fresh batch of wide eyed I am going to change the world people).

        I would be wary of putting my money in that bank. I would want some decent interest rates to cover my high risk here. Which means a higher burden on the people borrowing from this bank. Loans and deposits run banks.

        Now with all that gloom over. It could work. But only under a very particular set of conditions. And remember this bank. Is *ALSO* a startup.

        • (Score: 2) by M. Baranczak on Wednesday December 17 2014, @03:55PM

          by M. Baranczak (1673) on Wednesday December 17 2014, @03:55PM (#126913)

          I would be wary of putting my money in that bank.

          If it's like all the other banks in the US, then the deposits are insured by the government. So what do you care?

          • (Score: 2, Informative) by Anonymous Coward on Wednesday December 17 2014, @04:18PM

            by Anonymous Coward on Wednesday December 17 2014, @04:18PM (#126919)

            So what do you care?
            Have you ever had to get your money out of FDIC? It takes a decent amount of time and effort and usually involving a lawyer (more cost). I know some people who still have money owed to them from the S&L crap from the 80s but the lawyer fees at up any benefit so they no longer pursue it.

            Lets say you are running your mortgage and car payment out of that account on automatic (not unheard of). It is suddenly locked up for 4 months while you try to get your money out. You are now 2 payments behind on both (because you did not catch it in time) and screwed up your credit history. All because you picked the wrong bank.

            You will probably get your money back but at a considerable hassle and the possibility of screwing up other things in your life.

            • (Score: 2) by VLM on Wednesday December 17 2014, @05:21PM

              by VLM (445) Subscriber Badge on Wednesday December 17 2014, @05:21PM (#126939)

              Have you ever had to get your money out of FDIC? It takes a decent amount of time and effort and usually involving a lawyer (more cost). I know some people who still have money owed to them from the S&L crap from the 80s

              Times change, man. I had money in two dead banks in the last decade. One called netbank that got bought by a mortgage speculation company that later went broke because of mortgage speculation, taking the successful bank division down with it, and the other was a local century old bank that for no apparent reason started speculating in Arizona real estate (despite being 1000s of miles away...) so naturally they went out of business.

              The way the FDIC does it now, is a forcible merger often announced on a Friday. So one day I log into netbank, two days later I log into ING Direct. No changes other than UI and enormously higher fees. One day I log into M&I bank, couple days later I log into BMO-Harris, again no change other than UI and enormously higher fees. After that I'm like F banks, I'm going credit union.

              My local credit union provides better service, better rates, and lower fees than any bank in the area. They have a bailout plan of their own which basically mirrors the bank plan.

              Oh and my personal brokerage got bought out, not a bankruptcy as far as I know, and it was about the same level of disruption. New UI, higher fees, worse service, but no real change.

              As a side note I'm not aware of any merger carried out in the last couple decades that has ever resulted in anything other than higher prices and worse service. I suppose one might exist, but ...

              I have no data points on the S+L thing in the 80s, I was a teen thousands of miles away so nothing interesting happened WRT that. In the modern era you can always merge a dead bank with a TBTF megabank but in TX maybe the entire industry closed so there's nothing to merge with... I suppose in the event of complete economic system collapse my credit union would be F-ed but in the event of complete economic system collapse I'll have other concerns.

    • (Score: 1) by diaz on Wednesday December 17 2014, @01:01PM

      by diaz (3491) on Wednesday December 17 2014, @01:01PM (#126838)

      How would you buy Bitcoins if you can't get your cash into a bank? Or change your US Dollars that customers pay with to Uruguay Pesos?

      One problem they had was with the legal producers trying to pay their taxes. Their bank wouldn't accept their cash, so they couldn't write a check. So, the producers would just bring in a bag of cash to the state Department of Revenue, which isn't set up to take cash. Even if you created Colorado Coins, there still needs to be a way to make large transactions (thousands of dollars) with checks.

  • (Score: 0) by Anonymous Coward on Wednesday December 17 2014, @07:35AM

    by Anonymous Coward on Wednesday December 17 2014, @07:35AM (#126790)

    Now all they have to do is get rid of the odd, unnecessary, and confusing rule separating (sometimes) retail marijuana dispensaries and medical.

  • (Score: 3, Interesting) by Rivenaleem on Wednesday December 17 2014, @11:35AM

    by Rivenaleem (3400) on Wednesday December 17 2014, @11:35AM (#126820)

    So, if they start by creating their own corner of banking, to circumvent federal laws, what's next? How many steps are there between this and say ... splitting from the union? If you intend to avoid certain federal laws in favour of your own (legalizing weed) and you split your banking to avoid federal regulation, what's to stop you doing that with everything else until there's nothing tying you to the rest of the states?

    • (Score: 2) by Daiv on Wednesday December 17 2014, @02:24PM

      by Daiv (3940) on Wednesday December 17 2014, @02:24PM (#126865)

      One of the final steps is form an army big enough to defend themselves and their claimed territory. Good luck with that!

    • (Score: 2) by Blackmoore on Wednesday December 17 2014, @02:30PM

      by Blackmoore (57) on Wednesday December 17 2014, @02:30PM (#126869) Journal

      an awful lot of steps; if you are expecting a full out separation from the national government.

      the big hurdle would be the consent and approval of the local population. I wouldnt expect that as the political leaders have a vested interest in offices at federal levels, and federal money (for social services, roads...) - and without that leadership push- people will remain content with status quoe

      Either the economy or the social order will have to break down before you see that kind of political change.

    • (Score: 2) by VLM on Wednesday December 17 2014, @05:42PM

      by VLM (445) Subscriber Badge on Wednesday December 17 2014, @05:42PM (#126945)

      So, if they start by creating their own corner of banking, to circumvent federal laws, what's next?

      Well, apparently nothing at all, seeing as the first credit unions in the world are about 160 years old and the first credit unions in the USA are about 110 years old.

      Note that they're following state regulation, not fed. Thats what state chartered CUs do. The whole point of the CU concept was/is to provide specialized local service. Which ranges from "we're pretty much just a bank that does more local donations than average" to "we meet the special needs of military members". Well, the reason for this CU is meeting the needs of weed growers and sellers. The growers would probably fit pretty well into the existing farmer oriented CUs but there are likely transactional advantages by putting the growers and sellers under the same roof.

      I've noticed the journalist coverage in the mass media is ridiculously poor. There is no CU "created by Colorado". The regulatory department in CO approved a charter for a new CU, thats all. Colorado isn't owning, operating, creating, staffing, designing this CU. Regulating, yes. But mostly CO is just getting out of the way.

      If you can get a bunch of dudes together and scrape up a couple million (thats all it takes) we could create and charter a CU for soylent news members.

      There is a minor complication that some states don't have a state level CU regulation department and have the feds regulate them, which would kind of defeat the purpose of a state wide charter. Another complication is traditionally the 40-something state regulation department usually regulate pretty lamely just cut and paste other states and the feds regs, so its just a trick of luck that CO CU reg dept at least temporarily, doesn't discriminate against the weed industry like the feds do. I suppose keeping the sweet sweet profits in CO instead of going to Delaware or NY will be kinda motivational to not cave in to the feds.

      • (Score: 0) by Anonymous Coward on Wednesday December 17 2014, @10:31PM

        by Anonymous Coward on Wednesday December 17 2014, @10:31PM (#127009)

        North Dakota has had a *public* bank since 1913.
        When everything was going to Hell a few years back because of the banksters, they smiled and continued to do just fine in ND. [googleusercontent.com] (orig) [truth-out.org]
        (They never got in trouble with the Feds because they didn't go as far as William "Bible Bill" Aberhart in Canada.) [googleusercontent.com] (orig) [dissidentvoice.org]

        -- gewg_

    • (Score: 2) by frojack on Wednesday December 17 2014, @07:21PM

      by frojack (1554) on Wednesday December 17 2014, @07:21PM (#126967) Journal

      So, if they start by creating their own corner of banking, to circumvent federal laws, what's next?

      Drag those big banks into court for illegal discrimination. Make it so painful and expensive to them that they change their policies or move out of the state all together. Its a legal business. Its a licensed business. The banks have no business picking customers.

      State Chartered banks will fill the void.

      --
      No, you are mistaken. I've always had this sig.
    • (Score: 1) by dpp on Wednesday December 17 2014, @07:29PM

      by dpp (3579) on Wednesday December 17 2014, @07:29PM (#126969)

      You seriously believe this is a slippery slope to an independent nation of Colorado?

      • (Score: 2) by Rivenaleem on Thursday December 18 2014, @03:36PM

        by Rivenaleem (3400) on Thursday December 18 2014, @03:36PM (#127168)

        Nope, I don't have any belief and I'm sorry if I made it sound in any way dramatic or presumptuous. I don't have much understanding on how tight the bonds between the states and the union are, but in the EU there's regularly talk about a country and whether or not they might leave the union.

        I was just interested in how much ability a state has in the US to make an institution that bypasses federal laws, who's whole purpose is to be unilateral across the whole nation and superior to all local/state laws.

        If Federal laws are what bind the states into a union, doesn't circumventing them undermine it somewhat?

    • (Score: 0) by Anonymous Coward on Thursday December 18 2014, @05:56AM

      by Anonymous Coward on Thursday December 18 2014, @05:56AM (#127089)

      Hopefully, right? Sounds like a step in the right direction. What with all these warlike fuckers running/ruining the Union and starting wars all over the globe [pitchinteractive.com] it's a good time to gtfo and have your own currency when the US dollar inevitably fails. [silveristhenew.com]

  • (Score: 0) by Anonymous Coward on Wednesday December 17 2014, @11:40AM

    by Anonymous Coward on Wednesday December 17 2014, @11:40AM (#126821)

    the same banks will start whining about the evil government meddling with the free market and taking away their customers.

  • (Score: 3, Interesting) by TheGratefulNet on Wednesday December 17 2014, @02:01PM

    by TheGratefulNet (659) on Wednesday December 17 2014, @02:01PM (#126853)

    "You know the dealer, the dealer is a man
    With a lump of grass in his hand.
    But the pusher is a monster
    Not a natural man.
    The dealer for a nickel
    Goin to sell you lots of sweet dreams.
    Ah...but the pusher will ruin your body;
    Lord he'll leave your mind to scream."

    wonder if this was intentional, the use of the word 'pusher'. I have not heard that word used for decades. and of course, it does not apply here. no one 'pushes' pot on people. people CHOOSE to enjoy it (or not). but there is no forcing going on.

    nice try, right-wing assholes. but your side is losing and that outcome is a certainty.

    --
    "It is now safe to switch off your computer."
  • (Score: 4, Interesting) by Phoenix666 on Wednesday December 17 2014, @02:20PM

    by Phoenix666 (552) on Wednesday December 17 2014, @02:20PM (#126860) Journal

    traditional banks have refused to do business with the industry for fear of inviting punishment from regulators that are required to enforce the federal prohibition on the drug.

    So, lemme, see, if you're a Mexican drug cartel, traditional banks will happily launder your money for you [cnn.com] and the federal government will give you a free get out of jail card (well, really it's a "let's never even mention the uncomfortable possibility of your executives going to federal prison for life" card), but if you're a legal business then they won't touch you with a ten foot pole.

    It does make perfect sense in Upside Down World, where we now live.

    --
    Washington DC delenda est.
    • (Score: 2) by bob_super on Wednesday December 17 2014, @04:29PM

      by bob_super (1357) on Wednesday December 17 2014, @04:29PM (#126925)

      If you got lots of money, banks love you. If you don't have a lot, banks are like a bad spouse, nagging you and wasting your money at every chance.

  • (Score: 2) by gallondr00nk on Wednesday December 17 2014, @03:35PM

    by gallondr00nk (392) on Wednesday December 17 2014, @03:35PM (#126902)

    Between that and the final, well overdue, end of the war on medical dispensaries, it feel like we might be actually making some progress. We might be just beginning to redress the insanity of Anslinger's racist dream that overshadowed the last century.

    God speed, legalised pot industry.