The former Marine and the former sheriff’s officer are on a low-key mission. They left the body armor and assault-style rifles back at the office. Their black SUV — it has to be black, right? — blends into the midday traffic barreling west through the city on Interstate 70. When you’re carrying $122,000 in cash stuffed in a blue tote bag that smells like marijuana, the less conspicuous the better.
“Right now, we’re like any other vehicle on the road,” says Phil Baca, the ex-sheriff’s officer, checking his rearview mirror to make sure they aren’t being tailed. “You’d never think there was a bunch of money in it.”
This is nothing more illicit than the delivery of one month’s worth of tax revenue owed to the state by Medicine Man, a family-owned Denver marijuana business with designs on becoming a national brand.
The cash — everything from singles to $100 bills — is being delivered to a state office by employees of Blue Line Protection Group. Former military and law enforcement veterans began the Denver company to provide security and other services to licensed marijuana businesses.
EDITOR’S NOTE: This is the third in an occasional series of articles on Year One of recreational pot sales in Colorado told through the lens of one business, Medicine Man in northeast Denver.
Part I: Family’s business ambitions: Become Costco of marijuana
Part II: Family’s bonds showing strains as business evolves
Part III: Bags of cash, bank subterfuge part of pot shop’s “desperate” strategy
Part IV: Family behind ever-expanding Medicine Man weighs sellout
The surreal scene of law-and-order guys transporting cash from recreational and medical marijuana sales to a state government office could only happen in Colorado, where the ambitions of a lucrative but risky business run headlong into the realities of trafficking in a product still illegal under federal law.
The only reason the $122,000 in cash from Medicine Man’s safe is zooming down the highway is that a month earlier, the bank that had taken the marijuana merchant as a customer closed its accounts.
There were no more checks to write.
Bad news in a letter from bank
Business had been smooth and thriving at 4750 Nome St.
Lines curled around the building on “Green Wednesday,” the first day of recreational marijuana sales anywhere in the world.
Andy Williams, the driving force behind Medicine Man, wore a blue suit and gave interview after interview. He expects his store — billed as the largest single-location dispensary in the state — to bring between $10 million and $12 million in revenue this year.
The three siblings at the heart of the business have their differences over how aggressively to expand and what kind of image to project. But after a buyout proposal from a man who made a fortune in snack foods fell though a few months ago, they resolved to move forward together.
Then, on April 14, the bad news arrived in a letter on Sally Vander Veer’s desk: Bank of America was shutting down Medicine Man’s accounts. There was no explanation, no mention of marijuana.
“I was panicked,” says Vander Veer, Medicine Man’s controller and the sister of co-founders Andy and Pete Williams. “I just opened this letter thinking it was normal correspondence.”
Vander Veer guesses the bank’s auditors flagged Medicine Man’s three-fold increase in credit-card deposits and cash after the opening of recreational pot sales Jan. 1.
Colorado’s pot banking co-op plan: Coverage of the legislation passed in Colorado to create a financial co-operative for the state’s cannabis industry
Marijuana businesses have long struggled to gain banking services because marijuana is as illegal as cocaine and heroin in the eyes of federal law — and federal agencies regulate banks.
Five months into Colorado’s history-making turn selling marijuana for recreational use, banking remains the largest obstacle for business owners and government officials trying to regulate them.
Like most Colorado marijuana businesses, Medicine Man has followed a many-forked road working with financial institutions so it can deposit money and pay its employees, taxes and other bills.
Back when Medicine Man started in 2010, Andy Williams says he opened an account in the business’ name at Wells Fargo, where he had a personal account and those of past failed businesses.
Williams, a serial entrepreneur and former industrial engineer, began Medicine Man with his brother Pete, a high school dropout who started growing weed in his basement and selling it to medical marijuana dispensaries.
The woman at Wells Fargo submitted the paperwork “in such a way that it didn’t call attention to itself,” and somehow Medicine Man remained in good standing even after the San Francisco-based bank began a purge of marijuana-business accounts in 2012, Andy says.
To keep up good relations, he went out of his way to learn little details about bank employees — like the teller who was teased because her wedding ring was small. He sprayed weed-scented dispensary cash with Febreze air freshener before depositing it.
Then, in 2013, Wells Fargo moved to close Medicine Man’s accounts.
Map: Colorado recreational marijuana shops and medical dispensaries
Wells Fargo spokeswoman Cristie Drumm declined to discuss Medicine Man’s circumstances. But she said it is against company policy to work with marijuana businesses, and the bank conducts internal reviews to enforce that.
Through industry word-of-mouth, Medicine Man was steered to Bank of America. Bank officials didn’t ask for much detail, Vander Veer says. She says she provided a copy of the articles of incorporation and described the nature of the business as “retail grow.”
Asked by a bank official whether Medicine Man sold anything else, she says she mentioned T-shirts and other sundry items.
“There was no instance when I didn’t answer their questions without a direct answer,” Vander Veer says. “I guess it was an omission. I didn’t mention marijuana. It may not be best practices. It’s desperate practices.”
All was well until April 7, the date of the letter from Bank of America. It was signed: “Sincerely, Closure Unit.”
A Bank of America spokesman said the bank does not comment on specific cases involving customers but that, as a matter of policy, does not work with marijuana-related businesses.
More recreational weed: Stay caught up on news coming out of Washington state
This was supposed to be a hopeful time for marijuana entrepreneurs looking for financial services that other businesses take for granted.
In February, the U.S. Department of Justice and an arm of the U.S. Department of Treasury provided guidance meant to make it easier for banks to openly work with marijuana businesses.
The guidance, however, put greater burdens on banks to document that marijuana companies were preventing distribution to minors and not funding criminal enterprises, as well as six other federal priorities.
Read the rest of this report on marijuana business cash issues