Downtown Denver was the scene of the Colorado Bankers Association's first ever national cannabis banking conference, which kicked off Thursday with nearly 200 attendees.

The two-day event, called "Marijuana and Banking: Conflict of Laws, Banks Caught in the Middle," featured presentations by government heavyweights like Gov. John Hickenlooper, Rep. Ed Perlmutter and U.S. Attorney Bob Troyer, as well as a slew of industry insiders from the FDIC, Federal Reserve Bank, private insurance companies and banks.

"As far as conferences specifically for bankers regarding the banking marijuana conundrum, as far as we are aware, this is the first of its kind," said Colorado Bankers Association representative Amanda Averch.

It comes at a time of increased frustration within the cannabis industry as contradictory government rules leave companies with tiny margins, big bank fees and under constant threat of violent crime due to the cash-only nature of the marijuana business. Many banks are hesitant to do business with cannabis companies lest they face federal prosecution for money laundering or other crimes.

Bank executives and representatives gathered at the Grand Hyatt Denver to trade tips, hear from experienced attorneys and get advice from the folks legislating as well as enforcing federal laws.

Hickenlooper, kicking off the event, told attendees that he hoped they would use the conference to formulate a strategy to convince the federal government to reconsider its prohibitionist stance. About 400 banks, he said, are currently doing business with marijuana companies and there’s already coordination between financial institutions, states and regulatory agencies. What they and businesses are missing, he said, is consistency and predictability. 

He suggested appealing to the current administration’s business-friendly platform. 

“I think the Trump administration has been very upfront that they’re pro-business,” Hickenlooper said in an audio recording provided to DBJ by his office. “Obviously the Justice Department has some serious concerns, but that business side, that’s where we really need to lean in.”

Perlmutter, D-Arvada, is co-sponsor of the SAFE Banking Act, a House bill that would allow banks to serve legitimate cannabis businesses in states where such sales are legal. A proposed piece of legislation in the Senate, the STATES Act, would do something similar. It's sponsored by Colorado Republican Sen. Cory Gardner and Massachusetts Democratic Sen. Elizabeth Warren. There are about 20 other bills circulating Congress that would loosen federal rules surrounding cannabis legalization, law enforcement and medical access.

“Voters in Colorado plus 46 other states and the District of Columbia have spoken and voted to allow for some form of marijuana in their state," said Perlmutter in remarks sent to DBJ after the event, as no media was permitted during the general session. "It is the responsibility of Congress to act to align state and federal law and address the public safety, crime and lost tax revenue associated with cannabis businesses being forced to operate on a cash-only basis. A legislative solution, such as the SAFE Banking Act, will allow cannabis-related businesses in states with existing regulatory structures access to the banking system without the fear of reprisal from the federal government.”

Other panels and topics at the conference include:

• Banking's regulatory environment and considerations
• Insurance considerations
• Hemp industry considerations
• Considerations for banking a marijuana-related business
• How to avoid inadvertently banking a marijuana-related business

Potential problems don't just stem from doing business directly with obvious marijuana-related businesses, said business litigation attorney Zane Gilmer, a partner at Kansas City-based Stinson Leonard Street. Gilmer spoke on a panel called "Banking's Legal Environment and Considerations," and said the audience seemed most interested in the possible implications of servicing so-called ancillary companies.

Companies that provide lighting equipment, fertilizer or even office supplies or legal and consulting advice to cannabis companies could be charged with money laundering, he said, even if only a very small percentage of their business goes to directly cannabis-related companies like dispensaries or grow houses. Banks could then be held liable themselves for banking money considered dirty by the federal government.

"Nobody can manage their risk down to zero," Gilmer said. But he encourages banks to look closely at all potential business customers, and categorize marijuana-related businesses into tiers — tier 1 would have the highest amount of risk, while tier 3 would be lowest. A dispensary, for example, would fall into the former, while an office-supply company that services a handful of cannabis companies may fall into the lower-risk tier.

Few businesses in Colorado will have no contact with cannabis companies as the industry grows, he admitted, but banks should still protect themselves. He likes to use a dartboard analogy.

"The closer you are to the bullseye, the more likely you are to get hit," Gilmer said.

Don Childears, president and CEO of the Colorado Bankers Association, said that when voters first approved retail cannabis sales, banks were split, roughly, into thirds. One third knew they wanted to service cannabis companies, another third was totally against the idea and the last third was indifferent, or took a wait-and-see approach. Four years after legalization went into effect, he says, most banks are at the very least interested in how to properly handle cannabis-related accounts.

He said that, while cannabis banking may make up a proportionately small piece of a typical bank's portfolio, it's vital that the industry receive clear and consistent direction from the federal government about handling the industry's cash.

Childears praised the speakers, and said he found seeming contradictions fascinating. While regulators seem to be relatively optimistic regarding banks, for example, industry types were less encouraging.

"What I really thought was interesting was the 'flip flop,' Childears said. "We had regulators saying, 'yes, banks should go for it,' and bank leaders saying, 'not so fast.'"

It's fairly representative of the topsy-turvy world that is the American cannabis industry. The federal government deems cannabis commerce a crime, while states are raking in hundreds of millions of dollars in revenue through local schemes — leaving banks stuck in the middle.