Pubdate: Sun, 30 Nov 2014
Source: News-Item, The (PA)
Copyright: 2014 The News Item
Author: David Pierson, Los Angeles Times
Page: A9


OAKLAND, Calif. (TNS)- The suppliers arrive at one of the nation's 
largest marijuana dispensaries carrying hundreds of pounds of 
cannabis in duffel bags, knapsacks and baby diaper totes. They leave 
with those same carriers stuffed with wads of cash.

Harborside Health collects the money from thousands of customers, 
spending $40 to $60 a pop for one-eighth of an ounce of pot. No 
credit cards or checks are accepted.

That's not by choice. Though Harborside's business is legal in 
California and a growing number of other states, most banks still 
won't touch the marijuana industry, fearing the federal prohibition 
that remains in place.

That's a huge security problem for Harborside and hundreds of other 
dispensaries forced to deal in cash by the truckload. The 
fast-growing Oakland company stores its weed and money in a phalanx 
of high-grade safes, inside a vault with 18-inch walls of reinforced 
concrete. Thirty-six cameras and two security teams-one to watch the 
other - guard the business.

To pay local and state taxes, employees carry bags filled with bills 
to government offices, changing routes every time.

"We've gone through three armored car services already, and that 
doesn't even include the many that refused to work with us," said 
Steve DeAngelo, who co-founded Harborside in 2006. "The biggest 
concern to us is the threat to the well-being and safety of our staff 
and patients."

Need for banking services

As the marijuana industry expands into a multibillion-dollar 
business, the need for proper banking services continues to 
intensify. Attempts by the Obama administration earlier in the year 
to ease the problem have so far failed to spark widespread change.

Without banks and credit cards, financial transparency remains 
elusive. Taxes and basic accounting are complicated. Paying vendors 
and employees is both a headache and a danger.

Unless Congress takes action, the problem will grow. Twenty-three 
states now allow some form of legal cannabis, including Alaska and 
Oregon, where voters approved measures for recreational use in the 
recent midterm elections.

Cash is already sloshing around an estimated 2,000 medical and 
recreational dispensaries operating in the U.S. today, up from about 
1,400 three years ago, according to the National Cannabis Industry 
Association. California is home to about three-quarters of them.

The Obama administration issued guidelines in February aimed at 
forging a path for banks to work with marijuana businesses in states 
where it's legal. It requires banks to issue reports ensuring that 
their cannabis-related clients are reputable, but it doesn't absolve 
banks of civil charges if those reports prove untrue.

As of August, only 105 banks and credit unions were working with 
legal cannabis sellers, according to remarks by the director of the 
Treasury Department's Financial Crimes Enforcement Network. The 
agency did not respond to requests for an update of those numbers.

"The guidelines certainly did not throw open the doors to banking, as 
we had hoped," said Taylor West, deputy director of the 
Denver-headquartered National Cannabis Industry Association. "We have 
continued to see financial institutions feeling vulnerable."

West has heard whispered anecdotes of measured progress.

"It happens extremely quietly," she said. "Most institutions that are 
starting to work with cannabis businesses are insisting that it stay 
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MAP posted-by: Jay Bergstrom