Not everyone is on board the legal cannabis train of good vibes and new business ventures. According to the office of U.S. Representative Ed Perlmutter, a whopping 40 percent of weed shops in Colorado do not have bank accounts.
The mainstream banking industry, composed of large financial institutions, are still hesitant when it comes to accepting money from canna-companies that badly need their services. This obstacle has forced some businesses to store their earnings in makeshift vaults. Some have armored vehicle services pick up revenue on a daily basis, in order to prevent accumulating large bags of cash in the store. During tax season, many owners have attempted to cover the collection using traditional banknotes, and officials can’t do anything about the current preferred mode of payment.
Loose Cash Problems
The main issue with flawed banking regulations is safety. Recently, a security guard overseeing a physical money transfer at an Aurora dispensary was killed during a lethal robbery. Criminals are aware of the banking problems local marijuana businesses are facing, and there are very few places where owners can privately store cash- in a safe, under a mattress or in locked registers during operational hours. This has resulted in a sudden spike in burglaries, especially in locations where weed businesses thrive. In 2014, the Denver Police Department confirmed that over 200 robberies concerning marijuana companies were reported.
“It makes no sense to have bags of cash, and it’s an invitation to organized crime, an invitation to theft, and invitation to tax evasion,” explained Oregon Senator Jeff Merkley.
Customers are also affected by the lack of banking services in the sector, since majority of retail shops impose a strict “cash only” policy. Legal marijuana businesses do not risk processing credit or debit card payments, because the risk of getting such transactions turned down by the processor or bank is staggeringly high. This also puts consumers in danger of being targeted by criminals. In particular, sickly patients and senior citizens (the latest up-and-coming demographic of cannabis users) on the way to a dispensary may have a difficult time warding off a group of armed robbers in the event of an unwanted confrontation.
The bottleneck of issues come from federal regulators, and the rescheduling of marijuana from Schedule I to Schedule II would solve the industry’s banking problems by legitimizing the status of the plant. But many are looking for more localized solutions that can be applied immediately on a state level. Previously, officials from Alaska and California have considered opening a state-run bank for the sector.
“The loose cash also makes it harder for the state to track businesses’ finances to make sure they are obeying the law and paying their taxes. And in order to get a bank account, some businesses will funnel their cash through a shell company,” said Tim Cullen a Denver-based marijuana business owner.