A cannabis business owner has many concerns when starting a business, such as hiring employees, quality of products, and marketing, to name a few. The one aspect that must be considered early on is how cannabis businesses deal with cash. Not just making money but how will customers pay for the product, where will money be stored, how will it be transported, what bank will the business use?
These are questions that traditional businesses have to answer as well, but typically for those businesses it’s as simple as filling at a form at the local bank or credit union. For a cannabis related entity, processing transactions and money is far from straight forward.
Most banks and credit unions which are regulated by federal agencies refuse to accept money from cannabis related businesses. The banking industry’s refusal to do business with the cannabis industry requires cannabis business owners to work in a world of cash only transactions. Cannabis and cash are for the foreseeable future tied together at the hip forcing many to ask the question how do cannabis businesses deal with cash?
For many cannabis businesses being forced to work only with cash, there are logistical problems and extreme safety concerns. The logistics begin with basic payment methods. Business owners can only accept cash, meaning debit and credit cards can’t be used, customers can’t use checks, therefore the only form of payment accepted in most cannabis businesses is cash. A business may be able to get away with claiming to be a “retail sales” company as a designation on a bank form, but eventually banks and credit unions will question the large number and amounts of cash transactions and may close the account.
Cannabis business owners are faced with the reality of housing substantial sums of cash onsite, or having to transport tens of thousands to hundreds of thousands of dollars each day. Many business owners are forced to purchase large vaults and safes to store cash onsite, and pay for armored vehicle services to move large sums of cash to other facilities for storage. Being forced to manage these large sums of cash constantly creates additional expenses, but also creates additional risk.
Without a banking account, some cannabis businesses have to fund everything from payroll to taxes in cash. Those companies also cannot accept debit or credit card payments, apply for mortgages or even get small-business loans — all matters that are regulated by the federal government. It also leaves the businesses with stacks of cash piling up in their offices — and criminals have taken notice.
Last spring, police in Phoenix estimated that six area medical marijuana dispensaries were robbed in a two-month span, according to local media reports. The year before, June was a particularly brutal month with several robberies or attempted robberies in Denver, Los Angeles, Detroit and San Diego.
The violence culminated with the death of an Aurora, Colorado, dispensary security guard, who was shot during a robbery. In Riverside, California, the next week, two dispensary workers were wounded in separate holdups less than 48 hours apart.
Cannabis businesses dealing in cash is not a secret. Criminals are aware that many businesses have large amounts of cash on-hand. There are countless examples of robberies and robbery attempts on cannabis businesses for this very reason. Business owners will have to protect themselves from the growing risk of vandalism and theft. S2S Insurance Specialists provides Crime Insurance to cover any losses in event of theft, burglary and vandalism. To learn more about how we can protect you your business, click here schedule a free 15-minute consultation or call us at (954) 790-6604.