October 3, 2011

Most Medical Marijuana Dispensaries Are ‘Cash Only’ After Feds Scare Away Banks

October 3, 2011
mmj business daily fact book sales medical marijuana recreational

marijuana financeby David Borden

We’ve reported this year on moves taken by the feds this year in California and Colorado putting pressure on banks with regard to doing business with medical marijuana dispensaries. This has taken its most serious toll so far in Colorado, a dire article from the Denver Post last weekend suggests:

On Friday, the last bank in Colorado to openly work with the medical-marijuana industry — Colorado Springs State Bank — officially closed down the accounts of dispensaries and others in the state’s legal marijuana business over concerns about working with companies that are, by definition, breaking federal law.

The feds, as journalist Clarence Walker wrote for us last spring, have not told banks they cannot handle dispensaries’ funds. Rather, they’ve instructed the banks to carefully monitor dispensary accounts for irregularities. This (perhaps intentionally, one wonders) has spooked the banks about the whole thing. Credit card processing companies have also been pulling out of the medical marijuana sector.

The industry isn’t taking things sitting down. They are lobbying the state legislature for permission to open a credit union, according to the Post, although it would likely be unable to procure depositors insurance. Rep. Jared Polis (D-Boulder) in May introduced the Small Business Banking Improvement Act, H.R. 1984, to address the dispensary banking problem. (Click here to write Congress supporting this and other pro-medical marijuana bills that are active this year.)

In the meanwhile, one has to ask whether the DOJ officials who’ve created this situation understand how crime works or if they care:

The owner of the Colorado Springs dispensary [interviewed by the Post] — who didn’t want his name or the name of his business used for fear of attracting thieves — said he will have to stick money in there instead of depositing it into a bank account. He’s also planning to take a class this weekend to get a concealed-weapons permit, for protection outside the store.

“Any way you plan it out,” the owner said, “there’s going to be a large amount of cash around. And that’s extremely scary.”

He’s also buying a “really big safe.”

Ironically, just last month a RAND study on medical marijuana dispensaries and crime found they don’t increase neighborhood crime, and that crime actually may have increased in Los Angeles in the vicinity of former dispensaries after the council closed down a majority of them last year. It’s only one study and we shouldn’t leap to conclusions, but it’s a good sign. The feds may be on their way to creating more crime where there isn’t already, though, if someone doesn’t put the brakes on.

Artilcle From StoptheDrugWar.orgCreative Commons Licensing


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