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The Strange And Dangerous All-Cash World Of Legal Weed

Marijuana entrepreneurs can't get bank accounts, so that leads to situations like showing up at the tax office with a massive bag of bills.

The Strange And Dangerous All-Cash World Of Legal Weed

Photos: Doug Shutter via Shutterstock

Local laws may allow the legal sale of marijuana in many states, but federal laws still class it as a drug like heroin. And that means no banks. Weed-selling, even legal weed-selling, is a cash-only business, and that includes paying taxes.

Dealing in all cash is a minor headache at the dispensary level, with the usual concerns of making change, combined with the unusual requirement to store all that money safely. But what about paying growers, or distributors? Or paying your sales tax? Then things quickly get out of hand. (That's if you can get in on the business in the first place. BuzzFeed recently highlighted how the minorities who were mostly targeted by the "war on drugs" are now left out of the legalization boom.)

Last year, according to The Guardian, the California Board of Equalization took in around $200 million in cash tax payments from the weed industry. This, says the BOE’s George Runner, leads to rather surreal scenarios—bags of cash too big to fit through the slots in the tellers windows, for example. One customer, Runner told the Guardian, brought $400,000 into the San Francisco office, in a big bag. The result, apart from a huge security disaster waiting to happen, is that the offices end up smelling of weed.

And while these tax-collection facilities do have safes, they’re not protected anywhere near the level of banks.

For this to change, federal law would have to legalize marijuana to a level that allows this money to be put in banks, and for these large payments to be converted to electronic forms. And as more and more dispensaries and growers set up shop, the problem will get worse. The BOE is looking at workarounds. The Guardian again:

Some ideas tossed around have included self-service teller kiosks placed around town like tax ATMs, and contracting with banks to allow the BOE to use a secure "back room" to receive payments. They have even looked into Bitcoin, Runner said – but "I don’t think anyone really understands Bitcoin".

If this situation continues, and it looks like it will, then weed growers, sellers, or anyone who runs a legal business based on marijuana, will become targets for robbery and extortion. It’s like the rest of the still-illegal drug trade, where dealers get knocked off, only in this case the weed dealers can go to the cops if they are blackmailed, kidnapped, or robbed. And if the worst does happen, then the growers can at least sit back and spark up a fat one to try and get over the trauma.

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