Security in the Cannabis Industry
Security in the Cannabis IndustrySecurity in the Cannabis Industry

Security in the Cannabis Industry

Marijuana businesses must take security into their own hands

A Democrat representing Cutler Bay and current chair of the Miami Dade Democratic PIarty introduced SB 1176 on the 22nd of February, the bill would effectively legalize marijuana for medical and recreational use in Florida.

Adults would be able to use, possess, transport, or gift up to 2.5 ounces of marijuana to another adult. The bill could also lead to marijuana-growing facilities and retail stores in Florida nevertheless limiting the number of stores based on local population volumes and allowing municipalities to vote to ban marijuana stores from opening within their borders.

If the bill does go through, Floridians will most likely witness the rise of what has become a very profitable industry in Colorado and Oregon. Earning legal status solely at State level limits the potential of the industry. Federal regulation still considers marijuana a schedule 1 narcotic and the controlled substances act discourages, prohibits, and even penalizes depository institutions from accepting deposits from marijuana growers or dispensaries. Stated in simpler terms, pot businesses can’t open bank accounts. The consequences for banks who disregard Federal regulations are grave and those who accept a deposit from pot entrepreneurs risk being charged with money laundering.

In Colorado, Dylan Donaldson, a 30 year old marijuana business owner has nine 1,000 pound safes mounted onto the ground in the back of his dispensary in the city of Boulder. The safes are one of his ways of safekeeping his revenues. At times, Donaldson has stored up to 100,000 in cash in the safes. During one unfortunate event, burglars broke into Donaldson’s business through the wall of the adjacent business. Unable to crack open the safes, the burglars stole $250,000 worth in marijuana plants.

Irony surrounds the industry in Colorado: while it is lega to grow pot plants, the current legal and fiscal environment is not conducive for a marijuana business to flourish. Federal law regulations attempt to protect the public from easy access to a “gateway drug,” still marijuana businesses generate huge sales conducted strictly in cash transactions.

What does the absence of a bank account really mean for a business?

In essence, a business without a bank account is like a body full of blood but with no veins or arteries. There’s no efficient way for the life source of these businesses to move through the financial system. No bank accounts means the business cannot receive check payments nor receive or make electronic transactions.

Some marijuana businesses earn upwards of $200,000 in sales each month and keep in mind, they can only accept cash payments! That’s a lot of Franklins. So what happens with all this paper? The owner of Karing Kind mentions in an interview that he’s heard of colleagues stuffing hundreds of bills in shoe boxes hidden in their closets, buried in holes dug in basements, and discretely tucked away somewhere on the streets or countryside. As for the owner of Karing Kind, his stash is “put in very secure locations,” which he’s not at liberty to disclose.

Whether you’re an advocate or an opponent, it is hard to miss the double standard these businesses operate under. Marijuana entrepreneurs cultivate their business in a legal limbo with a financial glass ceiling. Financial experts point out that “without banking, the industry is not sustainable in the long run,” and perhaps this is a way for the Federal Government to place a cap on the industry, which would undoubtedly prosper if it were given the benefits endowed to regular businesses.

What’s of more concern however is how this scenario will unfold in Florida if the Bill SB 1176 does go through. The average U.S. violent crime rate is 214.0, Boulder’s rate is 126.4 and in Miami the number rises up to 602.5. True, Miami’s population is more than four times as large as Boulder’s, but proportionately, Miami is still a more violent city.

Without bank accounts, Miami pot entrepreneurs will be forced to transport copious amounts of cash on speedways and neighborhood streets to stash their cash revenues into secret locations dispersed throughout the city. Boulder does not report violent crimes related to marijuana, but in Miami, where narcotic related crimes are higher, it’s possible that passing this bill while withholding banking benefits to marijuana entrepreneurs will risk public safety.

Some marijuana businesses, such as Dixie Brands have taken security into their own hands. Dixie Brands, Inc. was the first business to receive a marijuana infused product license form the State of Colorado. In June of 2014, Dixie Brands hired Sy Alli, a veteran in the executive protection field as their director of corporate security. He’s the first person ever to hold this title in a marijuana-based enterprise. Alli could tell from the get-go that working security for Dixie was unknown territory. “We don’t get the same information-sharing from law enforcement that I’ve received in other industries. Officers have been hesitant to embrace our industry, and that limits our partnerships,” Alli stated in an interview released on Security Magazine’s website. Alli’s corporate security projects at Dixie Brands include physical security at the facility, data and intellectual property protection, and executive and personnel protection.

We’ll state at this point that this post does not admonish the legalization of marijuana businesses or condemns the restrictions the Federal Government has in place restricting pot businesses from opening bank accounts. We only wish to point out the risks associated with having hundreds of thousands of dollars in cash floating around the streets of a city.

References:

  1. Gerdau, A., Woo J. (2015).Marijuana U.S.A. Guns, Drugs, And Money. Times Video. Retrieved from http://ow.ly/JYPze
  2. Meyer, C. (2015). Securing the Future of Cannabis. Security Magazine. Retrieved from http://ow.ly/JYPPK
  3. Munzenrieder, K. (2015). Bill to Legalize Recreational Pot Use Filed by Miami State Senator. Retrieved from http://ow.ly/JYRgE
  4. Richtel, M. (2015). The First Bank of Bud Marijuana Industry in Colorado, Eager for Its Wn Bank, Waits on the Fed. The New York Times. Retrieved from http://ow.ly/JYPfN

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