What will local dispensaries do with the cash once they can sell marijuana legally to any adult? Businesses are going to have to hide it because most of the major banks won’t accept it. In spite of the passing of Proposition 64 the sale of marijuana is still illegal under federal law, so it is mostly a cash-only business.
Concerned about the financial future of California’s growing marijuana industry, state treasurer John Chiang and the 16-member Cannabis Banking Working Group recently met at Oakland City Hall to hear testimony about the industry’s obstacles and find a solution to the state and federal conflict.
Chiang stated, “We hope to find some field within this deep forest where people can have a sense of what the rules and standards are, so they can decide how much risk they want to take on, what practices they choose to engage in.”
Joe DeVries, assistant to Oakland’s city administrator said an all-cash economy is not only dangerous, but stunts the growth of the cannabis industry and is inefficient, causing city governments to lose tax revenue. He said, “This is the only industry that is begging to pay taxes, the only industry that is begging to be regulated. The safer it becomes, the safer for consumers and the better for governments.”
To pay taxes, DeVries stated, “people are coming in with backpacks full of cash. This is not only unsafe but it takes time to count. We have to hire additional staff to sit and count the money. That is what cities will have to deal with” if the state doesn’t make the pot business as legitimate as other industries.
It’s not an entirely new challenge. For years, medical marijuana dispensaries and growers have been forced to use cash to pay their employees, rent, utility bills, taxes, and other expenses putting themselves at great danger. The concern will be magnified once licenses are issued for recreational sales in 2018. California’s marijuana industry is anticipated to bring in an estimated $1 billion in new tax revenue, according to the Legislative Analyst’s Office.
Larry Thacker, CEO of Caliva, San Jose’s largest dispensary said, “We can’t take credit cards. We can’t get access to capital. We can’t get credit lines. We can’t normalize our banking relationships. Every bank we talk to doesn’t want to talk to us. I implore you to help us come up with a solution that dramatically lowers the risk to our business.”
Debby Goldsberry of Magnolia Wellness, an Oakland-based medical marijuana dispensary recently said, “I have been kicked out of our finest banks, such as Bank of America and Wells Fargo. Our local credit union kicked us out.”
Growers face similar problems. Grower Kaiya Bercow, CEO of a Santa Cruz-based farm, which is paid for its product by dispensaries entirely in cash, said, “Banking is a nightmare. We do currently have bank accounts, but the vast majority of our finances are handled in cash. Numerous local and national banks have closed our accounts once they discover we are a cannabis company and are ‘high risk.’ “
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