Pubdate: Sun, 12 Jan 2014 Source: Honolulu Star-Advertiser (HI) Copyright: 2014 Star Advertiser Contact: http://www.staradvertiser.com/info/Star-Advertiser_Letter_to_the_Editor.html Website: http://www.staradvertiser.com/ Details: http://www.mapinc.org/media/5154 Author: Serge F. Kovaleski, New York Times Page: A8 FEDERAL LAWS FORCE LEGAL POT SHOPS INTO FURTIVE BANKING SEATTLE - In his secondfloor office above a hair salon in northern Seattle, Ryan Kunkel is seated on a couch placing $1,000 bricks of cash - dozens of them - in a rumpled brown paper bag. When he finishes, he stashes the money in the trunk of his BMW and sets off on an adrenalized drive downtown, darting through traffic and nervously checking to see if anyone is following him. Despite the air of criminality, there is nothing illicit in what Kunkel is doing. He co-owns five legal medical marijuana dispensaries, and on this day he is heading to the Washington state Department of Revenue to commit the ultimate in law-abiding acts: paying taxes. After about 25 minutes at the agency, Kunkel emerges with a receipt for $51,321. "Carrying such large amounts of cash is a terrible risk that freaks me out a bit because there is the fear in my mind that the next car pulling up beside me could be the crew that hijacks us," he said. "So, we have to play this never-ending shell game of different cars, different routes, different dates and different times." Legal pot merchants like Kunkel - mainly medical marijuana dispensaries, but also, starting this year, shops that sell recreational marijuana in Colorado and Washington - are grappling with a tough predicament: Their business is conducted almost entirely in cash because it is exceedingly difficult for them to open and maintain bank accounts, and thus accept credit cards. The problem underscores the patchwork nature of federal and state laws that have evolved fitfully as states have legalized some form of marijuana commerce. Though 20 states and the District of Columbia allow either medical or recreational marijuana use - with more likely to follow suit - the drug remains illegal under federal law. As a result, banks, including state-chartered ones, are reluctant to provide traditional services to marijuana businesses. They fear that federal regulators and law enforcement authorities might punish them, with measures like large fines, for violating prohibitions on money-laundering, among other federal laws and regulations. "Banking is the most urgent issue facing the legal cannabis industry today," said Aaron Smith, executive director of the National Cannabis Industry Association in Washington, D.C. Saying legal marijuana sales in the United States could reach $3 billion this year, Smith added: "So much money floating around outside the banking system is not safe, and it is not in anyone's interest. Federal law needs to be harmonized with state laws." The limitations have created unique burdens for legal marijuana business owners. They pay employees with envelopes of cash. They haul Chipotle and Nordstrom bags containing thousands of dollars in $10 and $20 bills to supermarkets to buy money orders. When they are able to open bank accounts - often under false pretenses - many have taken to storing money in Tupperware containers filled with air freshener to mask the smell of marijuana. The all-cash nature of the business has also created huge security concerns for business owners. Many have installed panic buttons for workers in the event of a robbery and have set up a constellation of security cameras at their facilities beyond what is required, as well as floor sensors to detect break-ins. In Colorado, Blue Line Protection Group was formed a few months ago, specializing in protecting dispensaries and facilities that grow marijuana, and in providing transportation security. Marijuana business owners have devised strategies to avoid the suspicions of bankers. A number of legal operations have opened accounts by establishing holding companies with names that obscure the nature of their business. Some owners simply use personal bank accounts. Others have relied on local bank managers willing to take chances and bring them on as clients. Richard Riese, senior vice president for regulatory compliance at the American Bankers Association, said banks wanted clear and comprehensive guidelines on how to do business with the legal marijuana industry. - --- MAP posted-by: Matt