The relatively recent changes in state laws governing possession and sale of marijuana in Colorado and Washington State have brought a halt to arrests for possession of that drug. This doesn’t mean that law enforcement’s days of being concerned about marijuana are over. The proliferation of legal marijuana shops is creating a new type of crime, where these shops are robbed for both their inventory and their cash proceeds.
Colorado has more experience with these licensed marijuana merchants, as Washington’s law was voted in only last November, and most communities are still hashing out how they will handle marijuana shops in their towns. Several have enacted local ordinances forbidding any of the shops.
Of course, the possession, transportation, and sale of marijuana is still illegal under federal law. Colorado shops cultivate and harvest their own product, and many produce THC-containing food products (cookies, brownies, ice cream, pills) on site for people who prefer to get their high by eating rather than smoking the drug. Until the federal issues are resolved, the dealers aren’t likely to risk their business licenses by importing product from out of state.
Cash-Only Transactions
The federal law problem also makes marijuana shops mostly cash businesses. Banks have taken a “hands-off” posture because any federally-regulated bank that did business with a marijuana shop could be charged with participating in a conspiracy under the Racketeer-Influenced Corrupt Organizations (RICO) Act, putting the bank’s entire assets at risk of seizure. Marijuana shops can’t accept checks or credit cards, and keep their cash on site in a safe, or offsite in some similarly secure location.
The allure of a euphoria-inducing product and lots of cash assets in one spot has created a new kind of crime wave in robbery and burglary of the shops. One of the first was the robbery of a Colorado shop called 420 Wellness. Three suspects entered the business while it was open, took a female employee hostage, and filled several trash bags with marijuana inventory before leaving. They were stopped and captured by police.
Since then, there have been at least eight burglaries and another robbery of shops in Denver and Boulder Counties, where both money and product was taken. One news report cites the Denver Police as saying that about 50 percent of the marijuana shops in the city have been robbed or burglarized in the last two years.
The shops have created a boom market for local security agencies. Shops are investing in heavy-duty door and window hardware, bulletproof glass for their outer windows and cashier areas, and lots and lots of armed security officers. One shop, called New Age Wellness, offers a contrast to the business name with a large sign reading “DEADLY FORCE” near the cash register, backed up with an armed security officer employed by Blue Line Protection Group. Blue Line was formed by Ted Daniels, a former cop and Army vet, to market to marijuana shops. His clients pay him between $5,000 and $15,000 per month for services, and he’s adding a new customer almost every day.
In mid-February, the Department of Justice issued new regulations that may make it easier for marijuana merchants to form conventional business relationships with banks. There are substantial extra reporting requirements for the banks, and an obligation to make a special report if a merchant’s revenues reach the level where money laundering is expected. No bank has come forward and announced they will start opening marijuana business accounts. It’s likely that their legal counsels are still weighing the pros and cons.
To be sure, there’s money for the banks to handle here. The Colorado Department of Revenue reported more than $9 million in sales tax revenues from marijuana shops in the fiscal year that ended last September, on sales of $329 million. This year looks to do even better, with over $3 million in taxes on $109 million in sales for the first quarter of FY 2014 alone.
Cash-strapped local and state governments are likely to find marijuana legalization an attractive option as a source of new revenue, although it will be a tough sell to the voters in the more conservative “red states.”
You can say, “That will never happen here,” but the same statement was said with regard to having a black president and recognizing gay marriages, too. This is not a matter of if, but rather, when.
