Pubdate: Fri, 20 Dec 2013
Source: Denver Post (CO)
Copyright: 2013 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Author: Jeremy Meyer
Page: 25A

FOR POT BUSINESSES, USING BANKING SYSTEM IS A SAFETY ISSUE

The news that the federal government is expected to give banks the
cautious approval to work with marijuana businesses is exactly what's
needed as Colorado is about to step into an industry with so many unknowns.

Without banking, the new retail marijuana endeavor is being set up as
a magnet for trouble if it remains a cash-based industry.

So far, banks have refused to provide basic services to cannabis
businesses because pot is still considered an illegal Schedule 1
substance under the federal Controlled Substances Act-despite
legalization in Colorado and Washington.

That has created a roughly half-billion-dollar industry that deals in
cash. You can imagine the problems from workers pilfering, money
laundering and robberies.

Michael Elliott, director of the Medical Marijuana Industry Group,
points to a California case where a dispensary owner was tortured by
thugs who chopped off his penis hoping to force him into divulging the
location of cash they believed was hidden in the desert.

Elliott knows of robberies in Denver dispensaries and has heard a
growing chorus of concern from business owners.

"It's like they are setting us up to get blamed for something horrible
happening," Elliott said. "When something does happen, we are going to
be pointing our fingers back and say, 'Fix banking. Treat us like a
legitimate business.' "

On the morning of Jan. 1, when stores open in Colorado to legally sell
marijuana to adults, people likely will line up with wads of cash in
their wallets.

"Talk about a dangerous situation," Elliott said. "We are having
positive discussions with the Denver Police Department about security.
And businesses are hiring their own security firms. That doesn't
change the fact that this is incredibly stupid."

Business owners trying to transition their medical marijuana centers
into retail pot stores are on shaky financial foundations. They have
difficulty getting loans, can't accept credit cards or checks, and
struggle with how to pay employees.

Elliott Klug, founder of the Pink House Blooms dispensaries in the
metro area, has had accounts closed at five banks after they've said
his business was too risky.

"We've kind of just hunkered down, and pay everything in cash," he
said. "I would love to be able to process credit cards, write checks.
It would be great to be a normal citizen in the banking world."

Sen. Michael Bennet's staff on Wednesday said the U.S. Department of
Justice understands the urgency and is expected to issue some sort of
guidance for banks early in the new year.

That was confirmed Thursday by Jack Finlaw, Gov. John Hickenlooper's
chief legal counsel, who said in a press call that he expects guidance
in the first quarter of 2014 that is similar to a Justice Department
memo in August that gave Colorado and Washington a rule book to follow
to avoid federal intervention.

Finlaw said he expects the feds to issue a "yellow light," but not a
green one.

Notoriously risk-adverse bankers may not immediately jump into the
marijuana rush, but any movement on this is welcome.

Meanwhile, Rep. Ed Perlmutter, the Democrat from Golden, continues to
push legislation with Washington state Democratic Rep. Denny Heck that
would allow pot producers to work with banks. That bill faces an
uphill climb in the Republican-led House, even with support from
Republicans like Rep. Mike Coffman of Aurora.

That makes even a yellow light from the administration an important
development.

"By this time next year, half the states will have some medical
marijuana provision or full recreational use," Perlmutter said. "It
has to be addressed. ... You can't operate in just cash. It invites
too much trouble."
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MAP posted-by: Matt