Cost of cannabis banking is risky O
n Tuesday, the city of El Centro gave more direction to city staff as it continues its rough draft of an ordinance that could pave the way for a medical marijuana dispensary in the city.
The city of Imperial is also in the initial stages as it looks to do the same.
As the cities slowly and cautiously move forward, one question that potential dispensaries will have to provide information to cities is how they plan to track transactions to ensure the city is receiving its tax shares and product isn’t disappearing from the stock room.
Tracking purchases
La Fleur co-founder Tammie Thomas, who along with co-founder Glenn Cadrez, are hoping to be the first to open a dispensary in Imperial.
Thomas said they plan to use a system called C4ever, which looks like an ATM machine, but works to keep a track of transactions and secure money so that no staffer ever handles any money.
“This same system is used in commissaries and has been for nine years,” Thomas said. “It is a system that doesn’t have glitches as those have all been worked out in the first year of its use. It keeps track of everything live time.”
On its website, c4eversy stems.com, it claims to have foolproof cash security, streamlined cash management, full government compliance and enhanced consumer experience.
C4eversystems did not respond to requests for an interview by the Imperial Valley Press.
According to the Summit Daily from Summit County, Colo., Herbal Bliss in Frisco, Colo., has been implementing the system since April 2016. Herbal Bliss sells recreational marijuana.
According to the Summit Daily, with the kiosk, customers place orders directly through the machine, pay, and wait for a budtender to fill their order.
The Summit Daily stated with the funds going directly into the locked kiosk, it deters any kind of theft.
Dan Williams, CEO of Canna Security America told the Summit Daily at the time that 90 percent of thefts in the industry were internal.
The Summit Daily reported between storing large volumes of cash and product, the cannabis industry has seen a few high-profile heists, such as $300,000 stolen from a Denver grow facility in 2014.
Herbal Bliss did not respond to requests for comment.
What happens with the money?
While the kiosk can keep a track of transactions and secure money inside the dispensary, the question remains, what happens to the funds after the money is extracted from the kiosk? And where is it stored? Because the U.S. Drug Enforcement Agency has already stated any extracts from the marijuana plant are still deemed illegal, federal law still prohibits banks and credit unions from conducting business with marijuana related businesses.
Barbara Hagenbaugh of the U.S. Department of Treasury’s Financial Crimes Enforcement Networks provided the Imperial Valley Press with a report from 2014 that states the U.S. Department of Justice and U.S. treasure will not prosecute financial intuitions that do business with marijuana related businesses that keep a close eye on their clients and report wrongdoing.
However, some banks are still hesitant to work with marijuana related businesses, while some have allegedly secretly done so for years.
In January, American Banker published an article stated some big banks worked with marijuana businesses despite denials.
It stated Bank of America, Citigroup, Wells Fargo and JPMorgan Chase have all made statements throughout the years saying they don’t work with marijuana related businesses. American Banker examined publicly available records from the state of Massachusetts and showed that numerous marijuana-related entities have had accounts at the four biggest U.S. banks for years.
“The analysis found that out of 84 applicants to operate medical marijuana dispensaries in Massachusetts, 29 reported having access to funds in at least one account at Bank of America, Citi, Wells or JPMorgan, or at one of their subsidiaries. Of the 29 applicants that had access to funds at one of the four big banks, 17 had a connection to B of A. The analysis covered applications filed between June 2015 and September 2016,” stated the American Banker article.
In California, Rabobank made it clear it doesn’t do business with marijuana-related businesses
“Under federal law, marijuana remains classified as an illegal substance. Since we are a federally chartered bank and insured by the Federal Deposit Insurance Corporation (FDIC), it is imperative that we comply with federal law at every juncture,” Rabobank Corporate Communications Officer Jacqueline Guzman said.
When asked what the dispensary would store its income, she didn’t answer, however, she had previously said, “We need resolutions. The CEO of C4ever has had a very promising meeting with a banker a couple weeks ago in Orange County. Showed them the system and its compliance with federal regulations and we are all hoping this bank opens up to our industry.”
C4eversystems did not respond to request for an interview to corroborate Thomas’ claim.