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InvisibleDebuteMachine

Registered: 09/29/06
Posts: 6,457
Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA)
    #19405147 - 01/11/14 06:25 PM (10 years, 1 month ago)

(There was a lot of crap that copied over, I tried to clean it up a bit. Took the texts out underneath the photos.)


Banks Say No to Marijuana Money, Legal or Not

By SERGE F. KOVALESKIJAN. 11, 2014

http://www.nytimes.com/2014/01/12/us/banks-say-no-to-marijuana-money-legal-or-not.html?_r=1


SEATTLE — In his second-floor office above a hair salon in north Seattle, Ryan Kunkel is seated on a couch placing $1,000 bricks of cash — dozens of them — in a rumpled brown paper bag. When he finishes, he stashes the money in the trunk of his BMW and sets off on an adrenalized drive downtown, darting through traffic and nervously checking to see if anyone is following him.

Despite the air of criminality, there is nothing illicit in what Mr. Kunkel is doing. He co-owns five medical marijuana dispensaries, and on this day he is heading to the Washington State Department of Revenue to commit the ultimate in law-abiding acts: paying taxes. After about 25 minutes at the agency, Mr. Kunkel emerges with a receipt for $51,321.

“Carrying such large amounts of cash is a terrible risk that freaks me out a bit because there is the fear in my mind that the next car pulling up beside me could be the crew that hijacks us,” he said. “So, we have to play this never-ending shell game of different cars, different routes, different dates and different times.”


Legal marijuana merchants like Mr. Kunkel — mainly medical marijuana outlets but also, starting this year, shops that sell recreational marijuana in Colorado and Washington — are grappling with a pressing predicament: Their businesses are conducted almost entirely in cash because it is exceedingly difficult for them to open and maintain bank accounts, and thus accept credit cards.

The problem underscores the patchwork nature of federal and state laws that have evolved fitfully as states have legalized some form of marijuana commerce. Though 20 states and the District of Columbia allow either medical or recreational marijuana use — with more likely to follow suit — the drug remains illegal under federal law. The Controlled Substances Act, enacted in 1970 classifies marijuana as a Schedule I drug, the most dangerous category, which also includes heroin, LSD and ecstasy.

As a result, banks, including state-chartered ones, are reluctant to provide traditional services to marijuana businesses. They fear that federal regulators and law enforcement authorities might punish them, with measures like large fines, for violating prohibitions on money-laundering, among other federal laws and regulations.

“Banking is the most urgent issue facing the legal cannabis industry today,” said Aaron Smith, executive director of the National Cannabis Industry Association in Washington, D.C. Saying legal marijuana sales in the United States could reach $3 billion this year, Mr. Smith added: “So much money floating around outside the banking system is not safe, and it is not in anyone’s interest. Federal law needs to be harmonized with state laws.”

The limitations have created unique burdens for legal marijuana business owners. They pay employees with envelopes of cash. They haul Chipotle and Nordstrom bags containing thousands of dollars in $10 and $20 bills to supermarkets to buy money orders. When they are able to open bank accounts — often under false pretenses — many have taken to storing money in Tupperware containers filled with air fresheners to mask the smell of marijuana.

The all-cash nature of the business has also created huge security concerns for business owners. Many have installed panic buttons for workers in the event of a robbery and have set up a constellation of security cameras at their facilities beyond what is required, as well as floor sensors to detect break-ins. In Colorado, Blue Line Protection Group was formed a few months ago, specializing in protecting dispensaries and facilities that grow marijuana, and in providing transportation security. The firm largely uses military veterans who have Special Operations experience.
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Marijuana business owners have devised strategies to avoid the suspicions of bankers. A number of legal operations have opened accounts by establishing holding companies with names that obscure the nature of their business. Some owners simply use personal bank accounts. Others have relied on local bank managers willing to take chances and bring them on as clients, or even offer tips on how to choose nondescript company names.

But the financial institutions eventually shut down many of these accounts after managers conclude the businesses are too much of a risk. It is not unusual for a legitimate marijuana business to go through a half-dozen bank accounts in a few years. While they are active, however, these accounts may have informal restrictions placed on them — some self-imposed — so they do not draw the scrutiny of bankers who may file suspicious-activity reports or would be required to report deposits over $10,000 in cash. The account holders may make only small deposits, and only at night and at certain branches. Mr. Kunkel of Seattle has such an account.

At the largest credit union in Washington State, BECU, about 20 accounts have been shut down in the last three years after it was discovered they were for businesses in the legal marijuana trade, Todd Pietzsch, a spokesman for the credit union, said.

Kristi Kelly, 36, who owns two dispensaries and several marijuana growing operations in the Denver area, said six bank accounts of hers had been canceled in the last 18 months. “Opening the account is not necessarily the problem,” she said. “Our cash deposit levels flag a bank’s compliance division.”

Ms. Kelly, who had just paid $10,000 in cash to the City of Denver for licensing and application fees to expand her business, said that several times a week she carried around tens of thousands of dollars in a bag. “I never felt as illegitimate as the day I had to buy a cash counter,” she said, adding that she spends three hours or so a day just managing the cash from her business’s multiple locations.

A.T.M.s are common in marijuana outlets, but the business owners often have to use their own cash in the machines in case law enforcement authorities conduct a raid and seize the money.

Those marijuana operations that do have bank accounts or use the personal ones of their owners can use a cashless A.T.M. service in which a debit card is swiped at a dispensary and the money is transferred into the recipient’s account.

“It is operating over the A.T.M. network and not the credit card network,” said Lance Ott, whose company, Guardian Data Systems, provides this service. “The A.T.M. networks are not as regulated. This is the loophole.”

Since legal marijuana operations, for the most part, cannot get bank loans, these small businesses have to rely on short-term loans from individuals, usually with higher interest rates.

To help, High Times magazine is starting a private equity fund to invest in marijuana businesses. But many investors may feel uneasy about marijuana businesses that do not have bank accounts. And without bank references, entrepreneurs say, it is much tougher to get lines of credit from vendors.

Leaders in the marijuana trade point out that giving accounts to businesses would allow for more transparency and meticulous regulation and would help ensure that jurisdictions receive the taxes they are entitled to.

Marijuana entrepreneurs and banks both would like clear guidelines from the government on how financial institutions can serve the industry. On Friday, six members of Colorado’s congressional delegation sent a letter to the Treasury and the Justice Department requesting that they “expedite” that guidance.

In August, the Justice Department issued a memo indicating that it would not crack down on legal marijuana as long as eight regulatory requirements were met, like preventing revenue from the sale of marijuana from going to criminal enterprises and preventing the distribution of marijuana to minors. The memo did not address banking.

The Treasury Department’s Financial Crimes Enforcement Network hopes to circulate recommendations by the end of this month to officials at the Treasury and the Justice Department for their opinions, an official briefed on the situation said. There is no timetable for formal guidelines.

Richard Riese, senior vice president for regulatory compliance at the American Bankers Association, said banks wanted clear and comprehensive guidelines on how to do business with the legal marijuana industry.

Mr. Riese said, for instance, that banks would want to know that they were not “aiding and abetting” a criminal enterprise if they provided services to marijuana businesses. “Banks will need a lot of detail from regulators to get the satisfaction and comfort they are looking for,” he said.

Sheelagh McNeill contributed research.



A version of this article appears in print on January 12, 2014, on page A1 of the New York edition with the headline: Banks Say No to Marijuana Money, Legal or Not . Order Reprints|Today's Paper|Subscribe


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Invisibleunknown1123
Experimental

Registered: 05/15/08
Posts: 5,813
Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: DebuteMachine] * 4
    #19405630 - 01/11/14 08:15 PM (10 years, 1 month ago)

Now why would the banks not want extra money? oh yeah, they are the cartels money launderers.


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Offlinemy3rdeye
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: unknown1123] * 1
    #19405917 - 01/11/14 09:29 PM (10 years, 1 month ago)

Alot of places in the world armour car companies are owned by well known gangsters. Its one more level of security because no one is going to rob the mob.
Mark my word there is ging to be a wiseguys bank and armoured car company in WA and CO if the situation doesn't change.


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OfflineBeanhead
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: my3rdeye] * 1
    #19407249 - 01/12/14 07:52 AM (10 years, 1 month ago)

We'll fund death and decay in the arms industry or opium trade but oh no that joint is bad.

SUE EM  :@


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InvisibleAdden
I'm a teapot
Registered: 06/04/03
Posts: 39,201
Loc: Flag
Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: Beanhead]
    #19407353 - 01/12/14 08:35 AM (10 years, 1 month ago)

Gotta suck to have a name like Sheelagh. Like you're gonna say it the normal way when you see it spelled that way. :rolleyes:


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InvisibleKT-BC
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Registered: 10/24/12
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Loc: the lake Flag
Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: Adden]
    #19407706 - 01/12/14 10:25 AM (10 years, 1 month ago)

i dont get these fucking bankers.. so they accept money from bars that serve alcohol to people that'll go out and drive hammered and kill 3 people, but wont accept money from a service that helps sick and dying people??


oh, what a world

:whatever:


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OfflineJot
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: KT-BC]
    #19408857 - 01/12/14 03:35 PM (10 years, 1 month ago)

I still think MJ kills motivation; for me at least :/


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The goal of spiritual life is not altered states, but altered traits



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InvisibleCyclohexylamine
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: Jot]
    #19409158 - 01/12/14 04:54 PM (10 years, 1 month ago)

Quote:

Jot said:
I still think MJ kills motivation; for me at least :/




What does that have to do with anything?


--------------------
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Have you ever had a dream that you were so sure was real? What if you were unable to awake from that dream? How would you know the difference between that dream world and the real world?


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OfflineD.M.T
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: Cyclohexylamine]
    #19409204 - 01/12/14 05:05 PM (10 years, 1 month ago)

I think he meant to post in another thread.


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Offlinebloodsheen
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: D.M.T]
    #19409349 - 01/12/14 05:35 PM (10 years, 1 month ago)

This is exactly why I hate when posters come on here and are like "Why is legalization taking so long, just do it already."

This is why it has to take so long! You cant just rape a multi-billion dollar industry into the country and expect shit like this to not crop up unless you plan for it. You need dorks and bean counters to figure out the minor details or the whole system will collapse


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A cautious young fellow named Lodge / Had seat belts installed in his Dodge. / When his date was strapped in / He committed a sin / Without even leaving the garage. That's clever, isn't it?-A boy and his dog


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InvisibleFungi
Psycho4ctive


Registered: 09/29/13
Posts: 393
Loc: Melbourne Flag
Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: bloodsheen]
    #19409754 - 01/12/14 07:20 PM (10 years, 1 month ago)

Bankers and pharmaceutical industry go hand in hand, medical weed makes a lot of drugs absoleet. Is it that hard to work it out? Control and money people.


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Formerly known as Psycho4ctive

To Fathom Hell or Soar Angelic, Just Take a Pinch of Psychedelic



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Invisiblebadchad
Mad Scientist

Registered: 03/02/05
Posts: 13,373
Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: Fungi]
    #19409929 - 01/12/14 08:06 PM (10 years, 1 month ago)

Conspiracy theories aside, the article touches on the reason for this.  There are federal laws and regulations about making money from illegal activities.  It's a risk, not because the banks don't want the money.


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...the whole experience is (and is as) a profound piece of knowledge.  It is an indellible experience; it is forever known.  I have known myself in a way I doubt I would have ever occurred except as it did.

Smith, P.  Bull. Menninger Clinic (1959) 23:20-27; p. 27.

...most subjects find the experience valuable, some find it frightening, and many say that is it uniquely lovely.

Osmond, H.  Annals, NY Acad Science (1957) 66:418-434; p.436


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Offlinecli_hlt
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: badchad]
    #19411084 - 01/13/14 03:13 AM (10 years, 1 month ago)

Bitcoin anyone?


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OfflineHumility
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: badchad] * 1
    #19411239 - 01/13/14 04:46 AM (10 years, 1 month ago)

badchad - Wells Fargo didn't seem to have any issues when they laundered many billions for Mexican cartels.  Their fine was like a week's profits and no one went to jail.  The head individuals at the bank came out in the black despite being convicted of money laundering billions of dollars.



bloodshea - Legalization as a lightswitch would work fine.  The industry is already alive and booming, it's just risky to participate in some states.

All of these problems are government problems and legislation problems. Erase the legislation.


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OfflineLord_McLovin
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: unknown1123]
    #19412357 - 01/13/14 01:00 PM (10 years, 1 month ago)

Quote:

unknown1123 said:
Now why would the banks not want extra money? oh yeah, they are the cartels money launderers.




It's because of asset forfeiture laws.


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Offlines240779
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: DebuteMachine]
    #19413434 - 01/13/14 05:36 PM (10 years, 1 month ago)

Quote:

The Controlled Substances Act, enacted in 1970 classifies marijuana as a Schedule I drug, the most dangerous category, which also includes heroin, LSD and ecstasy.




I hate that line.


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InvisibleDebuteMachine

Registered: 09/29/06
Posts: 6,457
Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: s240779]
    #19413545 - 01/13/14 05:55 PM (10 years, 1 month ago)

Lol, agreed. Schedule 1 actually means "no medicinal value" not "dangerous."

which has been proven as utter nonsense, but that's a different story.


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Offlines240779
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: DebuteMachine]
    #19413587 - 01/13/14 06:02 PM (10 years, 1 month ago)

I was mainly referring to the inclusion of LSD. I often see LSD used in that line.


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Offlinerunningfox2002
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: s240779]
    #19416272 - 01/14/14 08:01 AM (10 years, 1 month ago)

I bet it makes it easier for any shady store to cook the books since its mostly all cash.


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                              ...to have some fun?                            Nobody knows :wink:

Anything I say or talk about is strictly for my own search of knowledge and to satisfy my thirst of curiosity.


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OfflineD.M.T
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Re: Banks Say No to Marijuana Money, Legal or Not (SEATTLE,WA) [Re: runningfox2002]
    #19416488 - 01/14/14 09:36 AM (10 years, 1 month ago)

Heroin, LSD and ecstasy certainly aren't the most dangerous drugs out there. Plus all three have medical value.


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