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Long business relationships often end without warning. Kayvan Khalatbari, a co-owner of medical-marijuana dispensary Denver Relief, maintained an account for four years at the Alabama-based bank BBVA Compass as well as one with a merchant-processing company, which allowed customers to use credit cards. "They knew damn well what we were doing," he says. In May, Khalatbari received notice that the bank was closing his accounts. After a lengthy search, he was able to find a replacement bank whose representative allowed Denver Relief to transact through a shell company. To reduce the amount of currency it carries on-site, the dispensary uses a cashless ATM system in which customers swipe their debit cards and get receipts. But employees are still forced to make daily trips to the bank in their cars, scrambling their schedules to stave off robberies. "It's a huge issue," Khalatbari says.
"The lack of access to banking," says Betty Aldworth, former deputy director of the National Cannabis Industry Association, "is hands down the single most dangerous aspect of legal marijuana."
The tales are enough to make cubicle dwellers appreciate the wonders of direct deposit. Trips to vendors to simply pay a bill become white-knuckle journeys when your vehicle is crammed with cash. Employees at one shop fan out across Denver every month, visiting Western Union offices to pay the monthly rent in money orders. Another cuts fake checks to satisfy its payroll software, then distributes salaries in cash. Christian Sederberg, a lawyer who represents marijuana companies, has a client who carries $150,000 in a Kate Spade bag, scattering sums across different banks to escape notice. "It's an invitation to robbery," he says. "The fault will be squarely on the federal government when that happens."
Colorado officials are eager to find a solution. "Our perspective is these are legitimate businesses licensed by the state," says Jack Finlaw, Hickenlooper's chief legal adviser. "They're being regulated, following the rules and generating economic opportunities. We think they should have access to banks the same way any small business does."
The Department of Justice, which has said it will not interfere with states that pass more-permissive pot laws, is aware of the contradictory banking rules. "We agree that it is an issue we need to deal with," Deputy U.S. Attorney General James Cole told a Senate panel last fall. But in Washington, inertia is a more powerful force than consensus. Financial regulators, law-enforcement officials and banking representatives met to discuss a solution in December, but Justice spokeswoman Ellen Canale declined to confirm industry speculation that one was forthcoming. Says a senior law-enforcement source in Colorado: "There's not going to be an easy fix."
Even a signal that they won't be punished for transacting with pot merchants may not be enough to coax national banks into taking the risk. "I'm not terribly optimistic," says Robert Rowe, a lawyer for the American Bankers Association. "On this one, it would take an act of Congress."