According to marijuana industry officials, a “Don’t ask, don’t tell” policy some banks practiced became “Just say no.”
“We are probably a bit worse off,” said Mike Elliott, director of the Denver-based Marijuana Industry Group. “I’ve had more people tell me they’ve lost bank accounts, and I don’t hear many positive stories about things opening up.”
The Williams siblings did have stopgap measures in place, including an account for a separate entity that owns Medicine Man’s real estate and a restricted bank account set up by a brokerage firm.
The brokerage account does not accept cash deposits, which forces Medicine Man to pay many bills in cash.
“It just makes cash management a full-time job,” Vander Veer says. “There are just other things I’d rather be doing to move this business forward.”
Vander Veer says she is sending employees to 7-Eleven to purchase money orders in $500 increments to pay bills. For safety reasons, the owners and senior staffers do not take product or money home.
“I’m afraid that nothing is going to happen until someone dies, that no widespread changes will be made until it’s reactionary,” she says.
Firm handshakes and pistols
The guys from the security company arrive just after lunch. Vander Veer guides them to the safe room, where televisions display footage from some of the 65 cameras trained on the property. She punches in the code, spins a gold wheel and hands over the cash.
Paying taxes this way is a first for Medicine Man, but the business knows Blue Line Protection Group well. The firm’s armed guards have worked the door checking IDs at the store since Jan. 1.
The tax-delivery men have firm handshakes, broad shoulders, khaki pants and Glock pistols on their waists.
Baca, the driver, is a 28-year-old Denver native. As a member of the Jefferson County Sheriff’s Office special-operations response team, he says he worked the Democratic National Convention, transported high-risk prisoners and kicked down his fair share of doors.
His partner, 27-year-old Matt Karr, grew up on a Nebraska pig farm. The former Marine says he spent much of his 8½-year tour overseas in Iraq and on “some small missions that don’t need to go in the paper.”
Baca acknowledged “surreal moments” walking into a warehouse with workers calmly snipping bud from flowers, which in his past life would be a crime scene with people cuffed facedown on the ground.
Both men say they find the work satisfying.
“It is rewarding like doing CPR to save someone’s life?” Baca says. “It’s not like that. But you are making people feel safe.”
On these deliveries, Baca and Karr don’t take the same route twice. They switch up vehicles.
“After a while,” Baca says, “potentially dangerous things become the norm.”
The risks are real. Earlier this month, the Denver Police Department warned marijuana business couriers of a plot to rob them. That prompted Blue Line to take extra precautions, including putting an additional armed guard on some runs.
At the Department of Revenue office, they are whisked past people waiting to renew their vehicle registrations or pay fines. They don’t need to take a number.
They are led to Window 1, where state employees count bills that in the previous month were used to purchase bubble hash and Cherry OG.
“Tell them thank you for having it well organized,” the clerk says.
The couriers head out, joking that they are no longer of value.
Laughed out of the room
Not surprisingly, the marijuana industry’s banking crisis has attracted opportunists, some more credible than others.
Two men in their early 20s came to Medicine Man claiming to be former special-forces members. They said they were fully insured and bonded and prepared to use their private plane to fly Medicine Man cash to a bank in the Cayman Islands on a monthly basis.
Their proposed cut? Seven percent of the deposits.
Vander Veer laughed them out of the room.
The most promising proposal to date came from the very same company that guards Medicine Man’s doors and pays its taxes.
On a May morning in Andy Williams’ office, two representatives of Blue Line Protection Group laid out their plan.
The company would serve as a compliance intermediary, an independent third party that would provide banks with data confirming that customers are 21 or older, licensing confirmation, monthly tax income, sales figures and other sensitive information.
“The banks are saying they won’t do it because it’s an enormous amount of information they don’t possess,” says Dan Sullivan, Blue Line’s vice president of sales and training. “A third party, though, could do it for them. That could work.”
Sullivan says the company is working with five Colorado marijuana companies as part of a beta program and has drawn interest from two Colorado-based banks, which he would not identify.
Blue Line would transport cash from businesses, store it in its own vault and then take it to a bank processing center, he says.
The service would cost $2,500 a month, Sullivan says.
Andy Williams says the arrangement would give Medicine Man access to debit cards and checking. He says the terms are agreeable.
“It’s the only solution we have right now,” he says.
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Jenifer Waller, senior vice president of the Colorado Bankers Association, says third-party compliance plans are a new development. A handful of companies have emerged with proposals in recent weeks, she says.
“I still don’t see it as being a solution,” Waller says. “The challenge to banking isn’t necessarily the compliance, it’s that (marijuana) is illegal federally. Until a change is made at the federal level, I don’t see any resolution taking place on this topic.”
There is little hope among bankers or industry officials that a bill signed into law this month by Gov. John Hickenlooper will provide a fix, either. The legislation would create the world’s first marijuana business banking cooperative. The Federal Reserve Bank would need to approve, an uncertain prospect.
For now, Medicine Man’s ambitions are not being slowed by the lack of a bank.
Negotiations are underway to purchase property outside Denver for an additional retail operation and a greenhouse grow.
Still, Williams must figure out how to handle a $1 million loan he’s receiving from an investor for an expansion of the current location.
“What do you say?” Williams says. “‘I want it in cash, guys?’”