House Committee on Business, Labor, Economic, & Workforce Development (05/01/2014)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON BUSINESS, LABOR, ECONOMIC, & WORKFORCE DEVELOPMENT

Date:	05/01/2014	ATTENDANCE

Time:	01:45 PM to 05:01 PM	Exum	X
		Hamner	X
Place:	LSB A	Holbert	X
		Navarro	X
This Meeting was called to order by		Nordberg	*
	Representative Williams	Rosenthal	X
		Ryden	X
This Report was prepared by		Szabo	X
	Erin Vanderberg	Wright	*
		Kraft-Tharp	X
		Williams	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
SB14-191 HB14-1398 SB14-209		Referred to the Committee of the Whole Amended, Referred to Finance Referred to the Committee of the Whole

01:46 PM -- SB 14-191

Representative Pabon presented Senate Bill 14-191, concerning the procedures for resolution of workers' compensation claims. The reengrossed bill makes numerous changes to the procedures for resolving workers' compensation claims. Among its changes, the bill:

• authorizes the presiding officer at a workers' compensation hearing to consider the current legal medical guidelines when investigating claims;
• allows the Colorado Department of Labor and Employment (CDLE) to adopt rules to review and approve settlement documents;
• extends the deadline for claim hearings from 100 days to 120 days;
• allows the presiding officer to summon an out-of-state party to testify either in person or on the telephone;
• requires the presiding officer to issue an order within thirty days of the receipt of the remand;
• permits claimants who must travel to receive a medical examination to receive $75 per day, in addition to transportation and lodging;
• requires that physicians who refuse to treat a workers' compensation claimant must provide a written notice with an explanation to both the claimant and the employer; and
• increases the aggregate lump sum payment a workers' compensation claimant can receive from a current limitation of $60,000 to a range of between $81,000 and $162,000.

Representative Pabon characterized the bill as a clean-up bill and stated that the proponents and department representatives signed up to testify would skip their testimony in order to expedite passage of the bill.


BILL:	SB14-191
TIME:	01:47:48 PM
MOVED:	Kraft-Tharp
MOTION:	Refer Senate Bill 14-191 to the Committee of the Whole. The motion passed on a vote of 8-2.
SECONDED:	Ryden
		VOTE
	Exum	Yes
	Hamner	Yes
	Holbert	Yes
	Navarro	No
	Nordberg	Excused
	Rosenthal	Yes
	Ryden	Yes
	Szabo	No
	Wright	Yes
	Kraft-Tharp	Yes
	Williams	Yes

Final YES: 8 NO: 2 EXC: 1 ABS: 0 FINAL ACTION: PASS

01:49 PM -- HB 14-1398

Representative Singer presented House Bill 14-1398, concerning the provision of financial services to licensed marijuana businesses. The bill allows for the creation and regulation of marijuana financial services cooperatives referred to as "cannabis credit co-ops" or CCCs, a new type of financial services entity with membership restricted to licensed marijuana businesses. CCCs are regulated by the Division of Financial Services in the Department of Regulatory Agencies (DORA) in a manner similar to credit unions with certain exceptions. Specifically, the bill:

• limits the number of CCC charters to 10 at any given time;
• requires incorporators of a CCC to provide written evidence of approval by the Federal Reserve Bank for access by the CCC to the federal reserve system;
• specifies that the Division of Financial Services must examine CCCs at least every six months;
• specifies that once a CCC member no longer owns or operates a licensed marijuana business, they are no longer qualified to be a CCC member
• prohibits a CCC from referring to itself as a bank or credit union;
• does not require CCCs to acquire and maintain deposit insurance;
• specifies that CCCs are subject to taxation and must comply with federal requirements relating to marijuana businesses; and
• requires CCCs to file a report with the Division of Financial Services regarding their compliance with federal law and guidance.

The regulation of CCCs is subject to a sunset review prior to its schedule repeal on September 1, 2020.

02:00 PM

Representative Singer discussed the issues facing the cash-only marijuana business in the state. He responded to questions from the committee. He stated that the Vicente Sederberg law firm and the Cannibis Business Alliance were major players in the drafting of this legislation. He stated that the Colorado Bankers Association (CBA) and credit unions did not oppose the legislation, and that he was still working with the Independent Bankers Association on amendments. He responded to questions about the specific provisions of the bill and how it interplays with federal law. He stated that this bill provides a template which allows the state to be ready when it receives federal authority to move the marijuana industry to a bankable business.

02:10 PM

The sponsor continued to respond to questions from the committee. He explained that marijuana dispensaries have gone through some of the most rigorous licensing processes in the state. Committee discussion moved to questions around the potential for federal interpretation of a CCC as a money-laundering institute. He cited the bill's audit mechanisms and the compliance with the Anti-Money Laundering Act (AMLA). Representative Singer stated that state's situation with legalized marijuana and illegal banking is a far from a perfect situation, but that this bill represents the best solution at this time to move the conversation forward. The committee discussed the public safety implications related to the issue.

02:23 PM

The sponsor discussed the issue of whether the bill is premature. He was excused to vote in another committee.

The following individuals testified on the bill:

02:26 PM -- Don Childears, representing the CBA, testified neutrally on the bill. Mr. Childears stated that the CBA supports efforts to allow the marijuana industries to bank. He explained the reasons that banks cannot support the marijuana industry's banking needs, including the issues of controlled substance proceeds, money-laundering, and issues related to the Financial Crimes Information Network. He discussed the recent guidance from the U.S. Department of Justice regarding marijuana banking. He stated that there is no bank in the state that he knows of willing to take the risk. He stated his dismay that the U.S. Congress is ignoring this issue. He responded to questions from the committee about guaranteed deposits. He stated that the CBA had requested a provision in the bill that a disclosure be made to depositors that their deposits are not guaranteed and, furthermore, are at risk of federal seizure.

02:40 PM

The witness continued to respond to questions from the committee. He discussed the expense of having the marijuana industry as a banking client. He responded to a question about those dispensaries that are using credit or debit cards. He discussed the complications of lending to the marijuana industry.

02:50 PM

Mr. Childears responded to a question about CBA's neutral position on the bill and his organization's ability to sway the U.S. Congress. The witness and the sponsor responded to a question on the timing of this legislation. Representative Singer stated that this bill was part preparation and part message to the federal government. Discussion on the bill's timeliness continued.

03:00 PM

Committee dialogue with the witness continued. Mr. Childears discussed central financing systems used by other industries. He discussed the importance of finding an answer to the marijuana banking issue.

03:08 PM -- Jenifer Waller, representing the CBA, testified neutrally on the bill. She discussed the issues related to the Federal Reserve Bank and Federal Deposit Insurance Corporation. She stated that the CCCs will be subject to federal law. Ms. Waller responded to questions from the committee.

03:13 PM -- Daniel Rogers, representing himself, testified in support of the bill. Mr. Rogers discussed his history in the banking and marijuana professions. He stated that his support for the bill was reluctant, but the bill represents a way to advance the important discussion of marijuana banking. He discussed the issues related to the cash-only business model. He responded to questions from the committee.

03:23 PM

Mr. Rogers continued to respond to questions from the committee.

03:25 PM -- Andrew Freedman, Director of Marijuana Coordination for the Governor's Office, testified in support of the bill. He stated that the Governor's office supported the bill as a way to frame the marijuana banking question to the federal government in a new way. He discussed the investment community's interest in the industry. He said that the Federal Reserve does not deal in hypotheticals, and that this bill would provide a template for discussion. Mr. Freedman responded to questions from the committee about this type of precedent in the Federal Reserve. He responded to a question about the provenance of the bill. He stated that the bill was based on the credit union statutes with input from the state banking association. He continued to respond to questions from the committee about the timeliness of the bill.

03:37 PM

Committee discussion continued with Mr. Freedman. Mr. Freedman stated that passage of the bill would represent Colorado's attempt to try every avenue available other than an act of Congress. Representative Wright discussed the bill deadline schedule.

03:45 PM -- David Quinones, Deputy Chief of Operations for the Denver Police Department (DPD), testified neutrally on the bill. He discussed the safety implications of cash-only businesses and stated that marijuana businesses were a tenuous issue for the DPD. Officer Quinones responded to questions from the committee and cited examples of robberies of cash-only businesses. He responded to a question about hired security. He continued to respond to questions related to public safety.

03:52 PM -- Christian Sederberg, representing the Vicente Sederberg law firm, testified in support of the bill. He discussed his firm's involvement with the marijuana industry. He stated that this pushes the ball forward to get real answers. He discussed his high-level of concern for his clients' safety with marijuana being a cash-only business. He responded to questions from the committee about the purpose of the bill. Mr. Sederberg stated that this bill is the best tool created so far to advance the marijuana banking solution and discussed the imminent public safety threat that the barriers to marijuana banking posed.

04:02 PM

Mr. Sederberg continued to clarify his perspective on the bill and respond to questions from the committee.

04:08 PM -- Chris Myklebust, representing the Division of Financial Services in the Department of Regulatory Agencies, testified in support of the bill. Mr. Myklebust stated his goal to clear up lingering questions with his testimony. He discussed his technical assistance in the bill drafting and the department's struggle with marijuana businesses from a regulation standpoint. He discussed the fluidity of the banking industry historically, specifically the hurdles credit unions once faced. He responded to questions from the committee about the threat of banking collapse.

04:16 PM -- Mike Elliott, representing the Marijuana Industry Group, testified in support of the bill. He provided background on the issue of banking for the marijuana industry. He expressed some concerns with language in the bill addressing checking and merchant services. He discussed the importance of solving this issue, noting that a solution from the federal government would be ideal. Mr. Elliott discussed the vulnerabilities of cash-only businesses.

04:26 PM

Mr. Elliott responded to questions from the committee about the political will around marijuana banking. He discussed the importance of a state solution.

04:34 PM -- David Blake, representing the Attorney General's Office, testified neutrally on the bill. He stated that the AG's support stemmed from the provision that required Federal Reserve approval. He responded to questions from the committee about the Department of Justice advisory on marijuana banking. He continued to explain his perspective on his bill.

04:44 PM

Mr. Blake continued to respond to questions from the committee about contingencies.

04:48 PM

The sponsor distributed and discussed Amendments L.001, L.003, L.004, and L.005 (Attachments A through D, respectively).


BILL:	HB14-1398
TIME:	04:52:14 PM
MOVED:	Kraft-Tharp
MOTION:	Adopt amendment L.001 The motion passed without objection.
SECONDED:	Williams
		VOTE
	Exum
	Hamner
	Holbert
	Navarro
	Nordberg
	Rosenthal
	Ryden
	Szabo
	Wright
	Kraft-Tharp
	Williams
YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB14-1398
TIME:	04:53:25 PM
MOVED:	Kraft-Tharp
MOTION:	Adopt amendment L.003 The motion passed without objection.
SECONDED:	Ryden
		VOTE
	Exum
	Hamner
	Holbert
	Navarro
	Nordberg
	Rosenthal
	Ryden
	Szabo
	Wright
	Kraft-Tharp
	Williams
YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB14-1398
TIME:	04:54:09 PM
MOVED:	Kraft-Tharp
MOTION:	Adopt amendment L.004 The motion passed without objection.
SECONDED:	Ryden
		VOTE
	Exum
	Hamner
	Holbert
	Navarro
	Nordberg
	Rosenthal
	Ryden
	Szabo
	Wright
	Kraft-Tharp
	Williams
YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB14-1398
TIME:	04:55:07 PM
MOVED:	Kraft-Tharp
MOTION:	Adopt amendment L.005 The motion passed without objection.
SECONDED:	Ryden
		VOTE
	Exum
	Hamner
	Holbert
	Navarro
	Nordberg
	Rosenthal
	Ryden
	Szabo
	Wright
	Kraft-Tharp
	Williams
YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

04:56 PM

The sponsor and committee members made closing comments on the bill.


BILL:	HB14-1398
TIME:	04:57:10 PM
MOVED:	Kraft-Tharp
MOTION:	Refer House Bill 14-1398, as amended, to the Committee on Finance. The motion passed on a vote of 9-2.
SECONDED:	Ryden
		VOTE
	Exum	Yes
	Hamner	Yes
	Holbert	Yes
	Navarro	Yes
	Nordberg	No
	Rosenthal	Yes
	Ryden	Yes
	Szabo	No
	Wright	Yes
	Kraft-Tharp	Yes
	Williams	Yes
Final YES: 9 NO: 2 EXC: 0 ABS: 0 FINAL ACTION: PASS

04:59 PM -- SB 14-209

Representative Tyler presented Senate Bill 14-209, concerning the requirements for permissible investments by insurers in loans secured by interests in real estate. This bill conforms statute to the recommendations of the National Association of Insurance Commissioners (NAIC) concerning investments by insurers in mortgage loans and similar instruments secured by interests in real estate. Current law limits such investments to real estate in the United States and limits the loan-to-value ratio to a maximum of 80 percent in most cases. The bill modifies these restrictions by allowing investments in loans secured by property in both the United states and Canada and modifying allowable loan-to-value ratios to be:

• 90 percent for purchase-money mortgages if the insurer holds the note;
• 80 percent for commercial property if the payment schedule meets certain requirements;
• 97 percent for mortgages on residential property if mortgage insurance applies; and
• 75 percent in all other cases.


BILL:	SB14-209
TIME:	05:00:00 PM
MOVED:	Kraft-Tharp
MOTION:	Refer Senate Bill 14-209 to the Committee of the Whole. The motion passed on a vote of 11-0.
SECONDED:	Ryden
		VOTE
	Exum	Yes
	Hamner	Yes
	Holbert	Yes
	Navarro	Yes
	Nordberg	Yes
	Rosenthal	Yes
	Ryden	Yes
	Szabo	Yes
	Wright	Yes
	Kraft-Tharp	Yes
	Williams	Yes
Final YES: 11 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

05:01 PM

The committee adjourned.