Cannabis banking still unpredictable: Q&A with Colorado Bank Commissioner Chris Myklebust

By John Schroyer

Colorado State Bank Commissioner Chris Myklebust flew to Washington DC in March to meet with a group of state bank regulators.

He also met with U.S. Sen. Cory Gardner, a Colorado Republican, and a staffer for U.S. Rep. Ed Perlmutter, a Colorado Democrat. He brought up cannabis banking, and was encouraged.

Marijuana Business Daily spoke with Myklebust after he returned to Colorado to see what he learned from his trip.

Myklebust estimated that only about five or six financial institutions in Colorado serve marijuana-related companies. And while multiple states have tried to figure out their own workarounds to cannabis banking, he believes a change in federal law is necessary – something he thinks ultimately will occur.

What did you learn on your trip?

I was able to speak with a staffer for Congressman Perlmutter’s office, and I was also able to speak with Sen. Gardner in person, just to let them know that there are a lot of folks in Colorado that are concerned with what the new (marijuana) policy out of Washington may be.

Those two gentlemen share my concern. They couldn’t tell me any specifics. But what they did say is that people are working in the Senate for some sort of a bill, without a timeline, and I got the same message on the House side. I feel like they share the concern, but the uncertainty continues.

What concern do they share?

The concern is that with a new president and uncertainty where change might come, that we would take a step backward. The concern is for a public safety issue that comes with having a lot of cash on the street.

So if the Trump administration were to take a stricter stance on state marijuana laws than the Obama administration, the banking situation could get worse?

Yes. We’re working under guidance; we don’t have law. We have the guidance that was issued by FinCEN in 2014, and then we have the Cole Memo guidance. Just the changes in policy – or the perception that there are changes – that perception of risk makes people take action before maybe we have all the facts. I’m just really hoping Congress will do something to create a structure within the law so we don’t have to rely on simple guidance.

Did you get any sense of where things may go while you were in Washington? 

I was encouraged. The sense is there’s not going to be a significant change. So right now I perceive the status quo regarding the ability of states to govern under their law, which we have under the guidance.

What needs to happen for MJ companies to get the same access to banking that companies in other industries have? Is it going to take an act of Congress?

Yes. Specifically, Congress needs to not focus on the Controlled Substances Act per se, because there are international implications with that.

What I think Congress should focus on would be a safe harbor for banks and credit unions and traditional financial service providers, even money transmitters, to be able to act under state law without the threat of federal prosecution. And I think that could be done through safe harbor-type legislation without having to dismantle the CSA in its current form.

I’ve looked at prior versions of what Congressman Perlmutter has tried to put forth, and that’s exactly what it does. So I think the model exists, and I’d like to see it move forward.

What obstacles remain for marijuana businesses and banking? Is it just that banks and financial institutions need explicit reassurance that they won’t get into hot water with regulators?

Yes. And it’s not even federal regulators. I don’t even regulate national banks, but (based on) my relationship with the regulators on the ground, there’s been a lot of cooperation to get to where we are today under the guidance.

There are folks that don’t even know where they could bank, and that’s a problem. So if we get a change with the law that gives us not just guidance but a specific carve-out in the law about where this is legal – the folks that are acting in good faith and in compliance with the guidance – I think that would melt the ice with some of those folks, where maybe they would be more public about the banking services they’re providing.

It’s no secret that it’s kind of a hush-hush network right now going on with who might be banking the industry. I don’t even feel like I have a complete picture of who’s out there providing services, because no one’s publicly making any claims to offering services.

How confident do you feel that Congress will act in some fashion or another to resolve the banking situation for MJ companies?

I am very confident that something is going to happen, because we have more states every year that are legalizing marijuana and creating a legal structure within the individual states.

My question is, how long is it going to take? And my guess is as good as yours. I don’t know. I was hoping to see something a couple years ago.

This interview has been edited for length and clarity.

John Schroyer can be reached at [email protected]

2 comments on “Cannabis banking still unpredictable: Q&A with Colorado Bank Commissioner Chris Myklebust
  1. Scott Geelmuyden on

    So based on this article where does one go to look for banks that would offer a company in the MJ business banking services?

    Reply
  2. bbarakti on

    The guidance for canna companies to get a bank account is pretty easy to come across, regardless of this article. This article adds basically nothing to that conversation except to comment on the “mood” that a regulator experienced while speaking to congressmen. It’s just a note to “keep up the good fight” or something along those lines, things will get a bit easier, eventually.

    If you want to find a bank the advise goes like this:

    — have EXCELLENT bookkeeping/ business planning. Hire a professional bookkeeper/ CPA to help make sure you are keeping track of EVERY expense through your company in traditional terms/ documents/ processes. Business has been around a long time, ours will operate on the same fundamental structures and processes, we need to make sure we use those. The extra costs of accounting consultants early, will pay off in ease of fitting your business into the traditional business service world ie banking.

    — Hide NOTHING. When approaching a banking organisation, they’re going to be much much more invasive about your business and your life than your Dr will be when he does your annual physical. You might resent it, you might think you don’t need to disclose the mundane or tiny things, but you do. Just so they know you’re a upfront person who is willing to understand that they are the most vanilla type of people who have extremely low risk tolerances (no matter what media and the financial history of the last decade says). With your banker, transparency is everything.

    — Don’t even look at large national level banks (BoA, Citi, Wells Fargo, etc). Put together all of your business plans and accounting documents in an organized fashion (again probably a good idea to have your accountant help to give you a structure and list of the things you should use, tell them what you’re doing so they know the “types” of documents banks will normally ask for), take it to every local credit union within your area. Ask to speak to a branch manager when you go in and show them that you’ve put together your accounting documents for their perusal.

    — Generally considered a good idea to open a personal account at your local credit union and start building a PERSONAL relationship with the people inside. Do your personal business through them, build trust that you’re a legit citizen, and let that be the basis of this future business account. This (ideally) would have been started already, we all know how trust works between humans-….. slow to build, quick to burn.

    — If you find a branch manager that is open to the idea, but who then hesitates because there are so many unknowns as far as how they would even go about helping you, refer them to Safe Harbor Private Banking and Sundie Seefried. She has pioneered a “best practices” for credit unions to tip toe the precarious balance of federal regulators and serving their community. I believe she does banking workshops for people in their industry. Her example can provide a template for your local credit union to follow.

    — Other than that, the advice I’ve seen is to be thorough and dogged as far as your requests. Be polite and patient, but present your business case thoroughly, transparently, and with humility as many times as possible. Just like most things, it’s expected to take determination.

    We will all thrive if we come together in these things and direct the green tide as it comes in. The cut throat and antagonistic methods of some people are not the methods that the true pioneers of this industry used to get us this far, lets not regress (or prove the naysayers right) by in fighting and dirty business practices that look associated with the underground.

    Reply

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