Author Topic: BUZZ KILL: Banks turn away cash — lots of cash — from Colorado pot stores  (Read 407 times)

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Offline happyg

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By Valerie Richardson
A week after Colorado’s ballyhooed retail marijuana launch, the line at Evergreen Apothecary is still out the door. That comes as both good and bad news for co-owner Tim Cullen.

His business may be booming, but his banking situation remains sketchy. Federal rules prohibit banks from opening accounts for illegal drug enterprises, and recreational and medical marijuana sales are still outlawed under federal law.

Mr. Cullen has a business bank account, but only because he belongs to a business-management service that has allowed him to open an account under a different name. Even so, because of the merchandise on his shelves, he can’t get a small-business loan to keep up with his rapidly expanding footprint.

“We don’t like it, and the bookkeepers hate us, but that’s the way it is,” Mr. Cullen said.

Colorado officials and marijuana advocates are lobbying hard for federal authorities to grant marijuana businesses access to banking, a gaping pitfall exposed by the otherwise robust kickoff of Colorado’s first-in-the-nation recreational marijuana market at the start of the year.

The roughly 30 pot shops that opened Jan. 1 are generating a combined $1 million worth of business every day, much of it the result of cash transactions. Shops already are struggling to keep up with demand: At the 3-D Cannabis Center, for example, managers closed their doors for two days to restock, then announced that the line would be cut off at 5 p.m. or after the first 300 customers.

The result is that many stores are winding up with piles of money at the end of the day and nowhere safe — or legal — to stash it.

“A lot of business owners are operating on a cash-only basis, and you can imagine the security issues with that,” said Mike Elliott, executive director of the Medical Marijuana Industry Group, an industry advocacy organization based in Denver.

“For every business with an account, I’ve heard 20 stories from people who have said, ‘We had a bank account, and I don’t know why, but they kicked us out,’” said Mr. Elliott. “We’re talking about a checking account here. So you don’t have to show up at the Colorado Department of Revenue and pay your taxes in cash.”

The problem is likely to intensify as more stores open and investors dive into the market in search of the next big thing. Shares of pot-related stocks are soaring even before major Colorado cities such as Aurora and Boulder finalize their rules and grant licenses.

Barred from the banks

Bank access has long been a problem for the medical marijuana industry, which now operates in 20 states. Two states — Colorado and Washington — allow recreational marijuana use for customers 21 and older, but more states are expected to join them in the next few years.

In Colorado, state and business officials are urging officials at the Justice and Treasury departments to issue a guidance giving leeway to banks in states that have legalized marijuana. The Justice Department released a memo in August that permits Colorado and Washington to proceed with their regulated markets.

Even if that happens, a memo might not be enough to persuade most banks to accept marijuana-related clients, said Don Childears, president and CEO of the Colorado Bankers Association.

“Banks have been told they should not be handling these accounts, so they’re more than nervous,” said Mr. Childears. “You really need a federal statute. But politically, I don’t think members of Congress in either party want to be perceived as being soft on drugs

More of the article at link:
 http://www.washingtontimes.com/news/2014/jan/12/banks-turn-away-cash-from-legal-marijuana-in-color/#ixzz2qIKj1XMZ
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Offline Gazoo

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"The Tea Party has a right to feel cheated.

When does the Republican Party, put in the majority by the Tea Party, plan to honor its commitment to halt the growth of the Federal monolith and bring the budget back into balance"?

Offline happyg

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This video is related and funny.

http://www.truthrevolt.org/news/gone-pot-cnn-reporter-gets-contact-high-covering-colorado-pot-story


<a href="http://www.youtube.com/watch?v=XqKvxojZtIU&amp;feature=player_embedded" target="_blank" class="aeva_link bbc_link new_win">http://www.youtube.com/watch?v=XqKvxojZtIU&amp;feature=player_embedded</a>

Offline massadvj

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"Rocky Mountain High" -- now that's rich...
"She only coughs when she lies."

Online EC

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Sheesh. Keep enough on hand for operating costs, go to a check cashing place with the rest of the cash and get them to cut you a check. They'll waive the fee, since it means they don't have to go to the bank themselves.

Only in America is cash considered an inconvenience.
« Last Edit: January 13, 2014, 12:09:41 PM by EC »
Anyone who tells you you can't buy happiness has never been in a book store or an animal shelter.

You are the result of 3 billion years of evolutionary success. Act like it.

Avatar courtesy of Oceander

I've got a website now: Smoke and Ink

Offline SouthTexas

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Was going to post "Smuggler's Blues" by Glen Frey but they have pretty much blocked it.  :shrug:

Online EC

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Was going to post "Smuggler's Blues" by Glen Frey but they have pretty much blocked it.  :shrug:


<a href="http://vimeo.com/58719183" target="_blank" class="aeva_link bbc_link new_win">http://vimeo.com/58719183</a>


Got your back.
Anyone who tells you you can't buy happiness has never been in a book store or an animal shelter.

You are the result of 3 billion years of evolutionary success. Act like it.

Avatar courtesy of Oceander

I've got a website now: Smoke and Ink

Offline SouthTexas

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Thanks!  :laugh:

Once upon a time....

Offline Chieftain

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I read an article this morning that told of a Seattle dealer who carried a paper bag full of money into the King County Treasurer's Office last week to make a $51,000 tax payment, because he could not get a bank account for his pot business.  That means he cannot use debit or credit cards or accept checks.  All business is transacted in cast, and he regularly totes around big bundles of hard currency.  Many people don't realize that banks are required by Federal Law to report any cash transaction greater than $5000, and when they do, that cash gets frozen until the investigation is complete.

Seems to me this is going to be the next big "thing" in crime...ripping off pot dealers for large amounts of cash.

Keep in mind, this is all exactly the way the State Legislatures in Colorado and Washington have designed the system to work.



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