The Problem with Being a Cash-Cow
One night after a long day at work, I sat down with my IPad (and my pipe) and started watching Last Week Tonight with John Oliver segments on YouTube. As is normally the case, one segment turned into two and then three and then…well you get the point. Anyway, one of those segments featured the topic of doing business in the cannabis industry, and its main focus was on how federal law makes it rather difficult for companies in states like Colorado and Washington to do business as a “regular” or “normal” business would.
The segment focused on several different things but the one that really caught my attention was how due to federal regulations, dispensaries (the show featured local dispensary Karing Kind) have to work solely in cash. While I know that in order to purchase cannabis products I can only use cash, it never really occurred to me that everything in the business (taxes, paychecks, utility bills) has to be handled in cash.
That means dispensaries, like Karing Kind, have to find unique ways to take care of things such as securing what could easily be millions of dollars without the help of credited banking institutes. According to the office of U.S. Rep. Ed Perlmutter, a Democrat, 40% of cannabis companies in Colorado lack any type of bank account.
That simple fact alone makes working in the cannabis industry more dangerous than most other retail location. Even while most dispensaries have daily pickups from armored trucks, they are still dealing with thousands of dollars a day in cash. This makes them a prime target for robberies. In fact, last year, in Aurora, there was the robbery that resulted in the death of security guard Travis Mason.
I’m not trying to make dispensaries look unsafe, nor am I trying to say that this is a dangerous industry, I’m simply trying to point out that their lack of access to normal credit and banking establishments has left a target on their backs. Hopefully a recent bill passed by the U.S. Senate will allow banking institutions to work with cannabis in states where it’s legal. Until then, unfortunately, dispensaries will have to continue to try and protect their cash, their customers, and of course their employees.
Don’t forget to stop by next Sunday at 4:20pm for my next Canna-Business Review! If you have a business you’d like me to review sound off in the comments!
Cannabis products are designed for adults 21 and over. Please consume responsibly.