As the advent of Amendment 64 unfolded in early 2014, the impact of a business industry cornered into operating without normal banking became clear.
Legal marijuana businesses lost bank accounts at an unprecedented rate.
The entrepreneurs tired of hopping from one institution to the next, couching company names in childish euphemisms just to pass the filters.
Minus a federal solution, state officials would have to come up with their own answer.
Each one ultimately landed at the feet of the same person: Commissioner of Financial Services Chris Myklebust.
Already a nine-year veteran of the agency that ensures safety and soundness of $9.7 billion in deposits in state credit unions, savings and loan associations and life-care institutions, Myklebust, 45, was first tossed into the regulatory recipe with the invention of a financial cooperative.
“We thought it wouldn’t make sense as a credit union or a bank, and that we should try something new,” Myklebust said. “And we had just two days to do it.”
An eleventh-hour petition at the Colorado legislature put the onus of regulating such a creature flatly on Myklebust’s lap. Without specific rules in place and more promises than structure, legislators passed the law that theoretically allowed for a financial services cooperative for the marijuana industry.
“I had no idea how it would play out, and we really wanted to just lay out the problem and elevate the questions to the federal government,” Myklebust said.
The way it was set up, anyone wishing to establish the cooperative would have to petition the Federal Reserve System for approval, which in turn would allow a state application for licensure to move forward.
No one has formally filed the application, Myklebust said, so the process has been merely theoretical.
“Meanwhile, the government is offering some guidance, either the Cole memo (from the U.S. Department of Justice) or the FinCEN guidance (from the Financial Crimes Enforcement Network), so existing institutions who wish to honor accounts can comply with reporting requirements,” Myklebust said.
A Regis University graduate in business administration who also holds an electronics engineering technology degree, Myklebust is a problem solver by training.
He’s learned to get things done.
So when a consortium of people wished to test the state’s standard credit union regulations, the one-time financial adviser paused.
“At this point, all plausible solutions have to be on the table,” Myklebust said. “Colorado said it wanted this industry to succeed, and banking is about the only way that will happen. We needed to try, but it had to be done right.”
Losing sleep for approximately three weeks, Myklebust said he rolled over his options and his responsibility as a regulator.
Ultimately, he found the letter of the law was clear and left him little choice: He had to charter the first credit union for the marijuana industry, The Fourth Corner. Then, he said, he hoped for the best.
“I started to feel more comfortable in my skin, knowing we went through the proper steps and processes,” he said. “After all, my responsibility is to the people of Colorado.”
Though Fourth Corner awaits word from the National Credit Union Administration about insuring depositor accounts, Myklebust admits he believes more questions and key decisions will land at his feet before the credit union’s doors open.
“They have to,” he said. “This is all so new to all of us; no one’s tried any of this before.”
He said he’s up for the challenge and hasn’t yet said he’d consider doing something else, though his résumé says he has several options he’s already tested.
In 2010, he authored “Disney Pixar Cars: A Collector’s Guide to Factory Produced Customs.”