Pubdate: Sun, 16 Feb 2014
Source: Reporter, The (Lansdale, PA)
Copyright: 2014 The Reporter
Author: Gene Johnson, Associated Press
Page: A10


SEATTLE (AP) - For marijuana dispensaries around the country, the days
of doing business in cash - driving around with bill-stuffed envelopes
to pay the rent, or showing up at a state revenue office with $20,000
in paper bags for the tax man - can't end soon enough.

It's not clear that the Obama administration's new guidance on
pot-related banking is going to end them.

The Justice and Treasury Departments on Friday issued banks a road map
for doing business with marijuana firms. The security-wary pot
industry, including recreational shops in Colorado and medical
marijuana operators elsewhere, welcomed the long awaited news, but
banking industry groups made clear that the administration's tone
didn't make them feel much easier about taking pot money.

The banks were hoping the announcement would relieve them of the
threat of prosecution should they open accounts for marijuana
businesses, Don Childears, president of the Colorado Bankers
Association, said in a written statement. It doesn't.

"After a series of red lights, we expected this guidance to be a
yellow one," Childears said. "At best, this amounts to 'serve these
customers at your own risk' and it emphasizes all of the risks. This
light is red."

Some dispensaries have managed to open accounts, sometimes by being
less than forthcoming about their business, but for the most part
banking has long been a headache for the cannabis industry. Because
marijuana remains illegal under federal law, banks haven't been able
to accept pot business without risking prosecution for money
laundering or racketeering.

But 20 states now have medical marijuana laws on the books; two,
Washington and Colorado, have legalized marijuana sales to adults; and
Alaska voters this summer will consider a similar recreational pot

With the industry emerging from the underground, states want to track
marijuana sales and collect taxes. It's a lot easier to do that when
the businesses have bank accounts.

It's easier on the businesses, as well. For Seattle's Conscious Care
Cooperative, a medical marijuana dispensary with three branches and
11,000 members, the guidance "definitely looks exciting," said Trek
Hollnagel, a business consultant there.

The dispensary started operating on a cash basis after bouncing from
bank to bank. Hollnagel said Conscious Care was always up front with
banks about their business, and some, including Bank of America, would
let them open accounts - only to freeze or close them later on.

"From one day to the next they changed their policies," Hollnagel
said. "If all your funds are frozen for two weeks it makes it
difficult to run a business. You write a rent check on a Monday, get a
call from the bank Tuesday saying the account's frozen, then a call
from your landlord on Wednesday saying the check bounced."

Instead, Hollnagel or others at the dispensary wound up driving around
with $10,000 in a bank envelope to pay their bills. And when they
showed up at the state Department of Revenue to pay their taxes, it
would take half an hour for an agent to count the money, Hollnagel

"Hopefully with these changes we'll be able to go back to being a real
business," he said.
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