(FILES)Twenty USD currency notes are seen in this 23 October, 2006 file photo at the Bureau of Engraving and Printing in Washington, DC. The US economy is often compared to a supertanker and although the 11 December 2007 interest rate cut by the Federal Reserve may ease its passage, corporate America is bracing for stormy seas ahead. Many economists expect an almost two-year-long housing slump, tighter credit and high energy costs to slow US economic momentum and dent corporate coffers in coming months. AFP PHOTO/Karen BLEIER (Photo credit should read KAREN BLEIER/AFP/Getty Images)

The little-known costs of the unbanked: Another aspect of the pot industry’s uphill financial battle

The many obstacles for legal cannabis businesses to access banking services mean that many of the entities are all-cash — such a practice comes with added costs, says a former federal bank examiner turned entrepreneur.

Lamine Zarrad, chief executive officer of mobile payment company Tokken, joins Cannabist editor-in-chief Ricardo Baca on The Cannabist Show to discuss the variety of costs of being “unbanked.”

Zarrad files those costs into two categories: tangible and intangible.

Tangible costs include employing security guards, booking armored cars, counting the money and storing the cash.

And that itself has spurred the creation of an industry sub-sector of marijuana-centric security companies, Baca notes.

“All those things cost money,” Zarrad says.

But the intangible costs are even more significant, Zarrad says.

“Even if it costs you 20 percent to operate in cash, due to shrinkage or security, you don’t necessarily recognize the fact that, for instance, your transactions are much smaller because they’re conducted in cash,” he says. “A person walks into a dispensary with a certain amount in their pocket. They’ll rarely go to an ATM to withdraw more.”

All-cash businesses, he adds, also are kept out of the larger economy and “essentially forced back into the black market by the system.”

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