The piggy-bank approach to marijuana sales also creates problems for state and local agencies charged with collecting taxes. “I don’t know how you regulate or tax and industry where you can’t follow the money,” said Mr. Childears.
Burden of bounty
The Denver City Council approved a resolution last week urging federal authorities to help resolve the issue, while Rep. Ed Perlmutter, Colorado Democrat, has introduced the Marijuana Businesses Access to Banking Act of 2013.
Mr. Elliott said he worries about safety, with thieves or crime syndicates targeting Colorado’s cash-rich but banking-poor pot shops.
“We’ve got members, in some cases they’re beautiful young women, who are forced to carry around a whole lot of cash,” said Mr. Elliott. “I’m having nightmares about it.”
Many store owners have hired security and installed cameras to enhance safety. The Denver Police Department increased its presence around the stores during the first week at the request of business owners.
“That was an incredible thing, because the police community and the marijuana community have had no common ground for decades,” said Mr. Elliott. “And now I have their cellphone numbers, and when they come by, they’re greeted with a handshake.”
The lack of dependable banking aside, Mr. Cullen said, he “couldn’t be happier” about his marijuana business. He has hired five more people since Jan. 1 and is finishing construction on two warehouses, which will require another 20 employees.
He said his two Denver retail stores are averaging one sale per 90 seconds. His biggest challenge is “figuring out how to give everyone a lunch break.”
“Everything from the customers to the staff who’ve stepped up to handle this is going as smoothly as I could have hoped,” said Mr. Cullen. “It’s been fantastic, and aside from the volume, I couldn’t ask for more.”
A week after Colorado’s ballyhooed retail marijuana launch, the line at Evergreen Apothecary is still out the door. That comes as both good and bad news for co-owner Tim Cullen.
His business may be booming, but his banking situation remains sketchy. Federal rules prohibit banks from opening accounts for illegal drug enterprises, and recreational and medical marijuana sales are still outlawed under federal law.
Mr. Cullen has a business bank account, but only because he belongs to a business-management service that has allowed him to open an account under a different name. Even so, because of the merchandise on his shelves, he can’t get a small-business loan to keep up with his rapidly expanding footprint.
“We don’t like it, and the bookkeepers hate us, but that’s the way it is,” Mr. Cullen said.
Colorado officials and marijuana advocates are lobbying hard for federal authorities to grant marijuana businesses access to banking, a gaping pitfall exposed by the otherwise robust kickoff of Colorado’s first-in-the-nation recreational marijuana market at the start of the year.
The roughly 30 pot shops that opened Jan. 1 are generating a combined $1 million worth of business every day, much of it the result of cash transactions. Shops already are struggling to keep up with demand: At the 3-D Cannabis Center, for example, managers closed their doors for two days to restock, then announced that the line would be cut off at 5 p.m. or after the first 300 customers.
The result is that many stores are winding up with piles of money at the end of the day and nowhere safe — or legal — to stash it.
“A lot of business owners are operating on a cash-only basis, and you can imagine the security issues with that,” said Mike Elliott, executive director of the Medical Marijuana Industry Group, an industry advocacy organization based in Denver.
“For every business with an account, I’ve heard 20 stories from people who have said, ‘We had a bank account, and I don’t know why, but they kicked us out,’” said Mr. Elliott. “We’re talking about a checking account here. So you don’t have to show up at the Colorado Department of Revenue and pay your taxes in cash.”
The problem is likely to intensify as more stores open and investors dive into the market in search of the next big thing. Shares of pot-related stocks are soaring even before major Colorado cities such as Aurora and Boulder finalize their rules and grant licenses.
Barred from the banks
Bank access has long been a problem for the medical marijuana industry, which now operates in 20 states. Two states — Colorado and Washington — allow recreational marijuana use for customers 21 and older, but more states are expected to join them in the next few years.
In Colorado, state and business officials are urging officials at the Justice and Treasury departments to issue a guidance giving leeway to banks in states that have legalized marijuana. The Justice Department released a memo in August that permits Colorado and Washington to proceed with their regulated markets.
Even if that happens, a memo might not be enough to persuade most banks to accept marijuana-related clients, said Don Childears, president and CEO of the Colorado Bankers Association.
“Banks have been told they should not be handling these accounts, so they’re more than nervous,” said Mr. Childears. “You really need a federal statute. But politically, I don’t think members of Congress in either party want to be perceived as being soft on drugs.”
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