Financial Protection for Marijuana Businesses and Investors

In 2014 the Colorado Legislature passed the Marijuana Financial Services Cooperative Act, which allows for the creation of what are referred to as “cannabis credit co-ops,” defined as “a cooperative association incorporated…for the twofold purpose of providing specified financial services to its members and creating a source of credit for them.”  According to the Act, the creation of these co-ops was necessary because, since growing, possessing, and selling marijuana is still illegal under federal law, many financial institutions are reluctant to provide financial services to marijuana businesses. With co-ops, marijuana businesses have access to legitimate financial services, thereby discouraging black-market financial dealings and reducing the need for businesses to keep large amounts of cash on premises.  Co-ops also give the state greater “ability to track and independently verify the accounting of licensed marijuana businesses’ revenues.”

Cannabis credit co-ops are overseen by the Colorado Department of Regulatory Agencies (DORA)’s Financial Services Division.  More information on the co-op program, including bylaws and how to apply for membership, can be found on the division’s website.  You can learn more about the Division of Financial Services in their annual report.

DORA also works to help consumers become educated on how the can protect their finances.  For those considering investing in the marijuana industry, this brochure from DORA explains how you can better protect your finances by understanding the risks and benefits of marijuana investing.  DORA’s Division of Securities also has a great deal of helpful information on their For Investors website, including tips on spotting and avoiding fraud, how to file a complaint, and much more.

To read more about the state’s regulation and oversight of the marijuana industry in Colorado, search our library’s online catalog.