At the Cannabis Club Collective in Tacoma, Brian Caldwell has installed a top-of-the-line alarm system, motion sensors and a safe, hoping to protect the cash he collects from the 200-plus customers who buy marijuana at his store on an average day.
“We pretty much had to make a bank within our walls,” he said.
And at Auntie Dolores, a marijuana edibles shop in Oakland, California, Julianna Carella uses pouches to bag up her cash at the end of the day, then sticks it in her trunk, feeling nervous as she drives away.
“It’s actually a huge headache to have to deal with all that cash. ... It’s horrible,” she said.
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While voters in a growing number of states have embraced marijuana in recent years, federal law still prevents pot businesses from using checks and credit cards offered by banks. That means that by law, they can only deal in cash.
Reviving a fight that stalled last year, the all-cash establishments and their allies in Congress are pushing hard again to change the law, convinced that marijuana shops have become inviting targets for thieves.
“Quite literally, you have accountants stuff $50,000 worth of cash in their backpack and walk it to a depository,” said U.S. Rep. Denny Heck, D-Olympia and a member of the House Financial Services Committee. “This is a recipe for mischief if we don’t solve it.”
There’s a new twist in this year’s debate, with some cannabis industry officials now suggesting that foreign banks or American Indian-owned financial institutions could serve as alternative depositories if Congress doesn’t provide a fix.
Many say conditions are bound to worsen as marijuana grows in popularity and markets expand.
So far, voters in Washington, Colorado, Oregon and Alaska have approved the use of marijuana for recreational purposes, while 23 states allow it for medical reasons. And California voters, who in 1996 made the Golden State the first to back medical marijuana, are expected to decide a ballot initiative on recreational pot in 2016.
“You’re talking about cash businesses that are in the hundreds of millions and approaching billions of dollars in state markets,” said Leslie Bocskor, founder of Electrum Partners, a marijuana consulting firm in Las Vegas. “And that’s just frightening from a community’s safety perspective.”
The issue is gaining some traction on Capitol Hill. Last week, seven senators, including Patty Murray, D-Wash., and presidential hopeful Rand Paul, R-Ky., introduced a bill that would allow state-sanctioned marijuana businesses to use banking services without prosecution.
While Paul has been busy courting legalization backers as part of his presidential bid, it marked the first time that Murray has lent her name to a pro-marijuana bill since joining the Senate in 1993.
“Patty is real emblematic of the momentum that’s been building,” said Heck, one of 27 House of Representatives members backing a bill called the Marijuana Businesses Access to Banking Act of 2015. “She’s been pretty deliberative about getting there but, to her great credit, she did.”
Murray said in a statement that she wanted to give “much-needed clarity and security” to banks, credit unions and marijuana businesses.
Bocskor said many investors are eager to capitalize on marijuana companies if they can be made confident that their investments will be safe. His company is exploring alternatives, including the use of foreign banks — he noted, for example, that pot establishments in the marijuana haven of Amsterdam already accept credit cards. And he said it’s possible that outside firms could sign agreements to operate banks on Indian reservations, taking advantage of their tribal sovereignty.
“We believe there are advantages in it,” said Bocskor. “We would like to see Native Americans be able to use banking as another method to bring a little more economic development to the tribal lands. That can happen, but it’s a pretty heavy lift.”
Scott Jarvis, director of Washington state’s Department of Financial Institutions, questioned whether such a system would work, saying tribes would still end up “with a whole bunch of money that they have to get somehow to the real world system.”
The possibility of tribal involvement surfaced in February at a marijuana conference at the Tulalip reservation near Marysville. It came only months after the U.S. Justice Department said it would not prosecute tribes that wanted to regulate marijuana for recreational use if they did a good job policing themselves.
“It doesn’t surprise me that they’re looking at it,” Jarvis said. “There are major banks that supply services to the casinos but won’t touch the marijuana. They might get very nervous. ... It’s not a clear path down the highway.”
Robert Odawi Porter, former president of the Seneca Nation of New York and one of the conference organizers, said most tribes are still in the early stages of deciding whether they want to enter the pot industry at all. He predicted that any decisions on banking would follow, coming “pretty far down the road.”
“It’s certainly true that tribes can establish their own regulatory systems, but the challenge is the degree to which you have to interact with and integrate with the commercial banking system in the U.S.,” Porter said.
Caldwell, who has operated his business in Tacoma since 2011, said he’d be open to the possibility of banking with tribes.
“Some of the tribes have done a great job of managing cash with casinos and everything else — they’ve obviously got the experience for it,” he said.
For now, Caldwell said, he has one small bank account that he uses carefully to avoid getting “flagged.” He has 10 employees and draws from 200 to 300 customers per day, with 85 percent to 90 percent of his business done in cash.
“We’ve learned to deal with it,” Caldwell said. “You never have all your cash in one spot.” He’s hoping that Congress will approve Heck’s bill, which he said could even open the door for bank loans. “Oh, my gosh, I would be doing cartwheels.”
The Obama administration last year advised U.S. attorneys in states where the sale of marijuana is legal not to prosecute banks that allow pot stores to open accounts and accept credit card payments.
U.S. Treasury Department officials say that dozens of banks and credit unions across the country changed course and now do business with pot establishments. But most remain skittish, fearing the rules could easily change with a new administration in 2017.
In Washington, which last week marked the one-year anniversary of its recreational pot sales, Jarvis said nearly a dozen state-chartered banks and credit unions are now working with marijuana businesses.
“They’re pretty quiet about it,” he said. “Nobody wants to be known as a marijuana bank.”