Federal Reserve Bank of Kansas City president Esther George on Thursday listened intently to a group of 20 businessmen, bankers and government officials who talked about the troubling lack of banking services available to the marijuana industry, but offered little indication about how it could be resolved.
In the first meeting of its kind, George heard tales from marijuana business owners that ranged from one who was made to close more than a dozen bank accounts — each time leaving with an armful of cash — to another who described how a family member uninvolved with the enterprise was forced to close an investment account, according to people who attended the closed-door affair.
“The fact that she took the time to meet … is a significant indicator of how seriously these issues are being taken now,” said Taylor West, deputy director of the National Cannabis Industry Association. “So even if there isn’t immediate action coming out of the meeting, it’s still definitely a positive step forward.”
Bankers and credit-union executives told George about unease about federal guidelines for handling marijuana accounts that were issued last year, describing concern about regulator backlash should a trusted customer suddenly turn out to be a rogue.
“What she offered was listening,” Marijuana Industry Group executive director Michael Elliott said of the hour-long meeting at Federal Reserve branch in downtown Denver. “While that might not seem like much, we very much appreciated it. Our message to her was that we are partners, people who care about safety and the legitimacy of this industry.”
George was not made available for comment after the meeting, but the Federal Reserve said it “has a role in ensuring the financial system’s safety and soundness in the state of Colorado and to gather information from local businesses and community leaders.”
The unprecedented gathering was forged by Rep. Jared Polis, D-Boulder, and Rep. Ed Perlmutter, D-Golden, who asked George to give industry leaders a chance to describe the problems they have faced in opening — and keeping — bank accounts.
George was already in town for a number of other meetings, a Federal Reserve spokesman said.
“No one believed we’d come away from this with a solution,” said Andrew Freedman, Gov. John Hickenlooper’s director of marijuana coordination. “But there were stories in there that showed how this really impacts people’s lives.”
Among them, business owners who handle cash-only payroll payments with armed guards nearby.
“I shared the story of how we’re so heavily regulated … and how it’s extremely cumbersome to be an all-cash business,” said Cannabis Business Alliance chairwoman Jaime Lewis, who owns Mountain Medicine in Denver. “As of now, I’ve been kicked out of three banks and it’s pretty frustrating.”
Absent was any mention of the status of an application by the Fourth Corner Credit Union, a Denver-based business aiming to become the first in the world to cater specifically to the marijuana industry.
Though chartered by Colorado to operate, Fourth Corner lacks a master account that can only come from the Federal Reserve. Its application has been pending since November.
Fourth Corner officials said they were not invited to the meeting.
George did not say why the application remains pending, several people at the meeting said.
The business side of recreational marijuana: Bags of cash, bank ploys part of “desperate” strategy — get an inside look at Colorado’s marijuana industry in this series of reports on one of the state’s biggest pot retailers, Medicine Man
Although George offered little to indicate what the industry could expect in the future, she was clear that much of what the Federal Reserve does is rooted in what Congress mandates, one businessman said.
“She gave her perspective as what the president (of a Federal Reserve branch) can do, and how they’re subjected to the rules that are made at the higher level and how they have to execute them,” said Chuck Smith, COO of Dixie Brands, which owns Dixie Elixirs, a maker of pot-infused products. “She did say there’s room for an understanding for how the rules should be interpreted in a state like Colorado, where marijuana is legal.”
Perlmutter said he’s looking to re-introduce a bill that would give financial institutions the legal clearances and protections necessary to bank the industry. A previous effort did not make a committee hearing calendar.
“She was very circumspect in her remarks,” Perlmutter said, “not giving us a yes, no or maybe.”
Nevertheless, industry representatives remained upbeat, though reserved.
“We’re on the same side to push this ball up the hill,” Lewis said, “but I’m not running down to a bank right now to go open an account.”
David Migoya: 303-954-1506, email@example.com or twitter.com/davidmigoya