PORTLAND, Ore. – Oregon's rapidly expanding legalized marijuana industry is struggling to figure out where to put all of its cash. Most banks refuse to take their money out of fear that the federal government could shut them down.
"Once they see there's a check that comes in with a cannabis name or anything affiliated with cannabis, we get letters that say that you have 14 days to remove your funds from the bank," said Brad Zusman, owner of Canna Daddy's Dispensary on Southeast Division Street.
The federal government still considers marijuana an illegal narcotic even though voters in 23 states – including Oregon and Washington – have made it legal in one form or another.
"It's like getting a tooth pulled by two different dentists," explained Zusman. "One is pulling it one way, one is pulling it the other way."
Criminals target marijuana dispensaries in Portland
In recent years, these cash-only dispensaries have become attractive targets for criminals. In the Portland metro area, police and industry insiders report there have been numerous break-ins, hold-ups and even murders because the bad guys know that the marijuana industry is operating in cash.
"When you talk to anybody who has been growing [cannabis] or owns a dispensary, there isn't one of them that I have ever met that hasn't been robbed multiple times," said Noah Stokes of CannaGuard Security. "They just consider it a cost of doing business."
Stokes helps set up custom security systems for businesses in the legal pot industry. Unlike most clients, they're not writing him a check or using a credit card.
"These guys can't have a bank account, so they have to pay us in cash. So here's a brown bag and half the time it stinks and half the time it doesn't," Stokes said with a laugh.
CannaGuard doesn't grow, process or sell marijuana, but nonetheless most banks refuse to do business with the Lake Oswego-based company.
"I get my bank account shut down, my line of credit shut down because I sell video cameras," said Stokes.
He is now forced to travel 50 miles away into Washington to do his banking.
Banks reluctant to take money from dispensaries, growers
Twin City Bank in Longview, Wash. is one of only a handful of banks offering checking and savings accounts for legal marijuana businesses in Oregon and Washington.
"We treat them the same as we would any other customer," said Neil Zick, president and CEO of Twin City Bank. "You know they are good customers."
Last year, the U.S. Treasury and Justice Department opened the door for banks to start doing business with the industry. But many banks fear there is still too much risk.
The new rules require banks to conduct extensive compliance checks and regular reporting.
Portland-based MBank took money from legal medical marijuana businesses for roughly ten months before deciding it was no longer worth the trouble.
"We never had an issue with our customer base," said MBank CEO Jef Baker.
But compliance, management and oversight required by the federal government proved to be too labor intensive.
"It was our determination that our resources were not adequate to match expectations," Baker said.
Oregon lawmakers advocate for change
This month, Oregon Senators Ron Wyden and Jeff Merkley co-sponsored a bill that would allow banks and credit unions to provide banking to legal marijuana businesses.
Congressman Earl Blumenauer, a Portland Democrat, has been working on marijuana-related issues for years. He supports the Wyden/Merkley bill, and has also co-sponsored a similar bill in the House.
"We have created a system that makes no sense whatsoever, that actually is a danger not just to the businesses, but to the general public," Blumenauer said.
He argues that forcing businesses to deal in so much cash actually makes it easier to skip out on taxes or launder illegal drug money.
"I think the momentum is building and I think there's a real chance in this Congress we can actually pass two bills – one that will tax them fairly, and enable them to have bank accounts," Blumenauer said.
Advocates say it would help bring this industry out of the shadows, once and for all.
"If the feds don't think there is cannabis money rolling through Bank of America or Wells Fargo, they are absolutely wrong," said Zusman. "There's millions and billions of dollars a year running through the banking system."
The dispensary owner argues banking would create transparency. Regulators could monitor, scrutinize and tax the industry.
It also would allow him to sleep easier at night, knowing his profits are in the bank.
"It's a big burden," Zusman said, "just knowing that you don't know what's going to happen when you walk out that door with the money."