These are heady days in Colorado, which on Jan. 1 became the first state in the world to legalize the sale of recreational marijuana to anyone over 21. State officials spent more than a year building a market that regulates weed from seed to sale. So far the selling is going just fine. The state's retail pot shops raked in more than $1 million on their first day in business, and demand has barely dwindled since.
The problem is the proceeds. Federal law classifies cannabis as a drug on a par with heroin and ecstasy, which has prevented more than half of Colorado's legal pot merchants from using bank accounts or credit cards. For the state, the banking problem makes money harder to track, harder to tax and harder to regulate. The issue is even more troublesome for the new multimillion-dollar businesses; they have to operate in cash, which is not just difficult but also dangerous.
As a result, Denver's marijuana moguls sometimes look more like criminals than capitalists. They lease secret off-site warehouses to store their money and pay employees with cash-stuffed envelopes. They tote tens of thousands of dollars around and foot five-figure tax bills with thick wads of 20s. To avert robberies, stores often stagger delivery schedules, hire decoy drivers and employ armed guards to monitor dozens of on-site surveillance cameras.