Imagine that you are a small business owner. Rather than opening a new coffee shop, craft brewery, or chic clothing store, you decide to enter one of the fastest-growing industries in the country: marijuana (also referred to herein as “cannabis”). Your state, Washington, has recently legalized recreational use of marijuana, and your new marijuana-related business (MRB), Plantworks, has joined thousands of other licensed producers to supply the new growing market.
You and your business partner lease 2,500 square feet of industrial workspace in Seattle’s North End and produce several pounds of high-quality “craft” cannabis for distribution to local dispensaries. Of course, you have taken precautions to protect your new MRB, installing security cameras, alarms, and razor wire on top of the chain-link fence around your building. However, those precautions prove to be toothless as burglars smash through the front door and steal approximately $52,000 worth of your product. The result is devastating for your business.
This was Regina Liszanckie’s experience in January 2018. Unfortunately, Regina discovered she was not alone, as numerous other MRBs in and around the Seattle area all suffered similar burglaries. A pattern emerged. Each of the MRBs was a smaller operation with less secure facilities, located in remote and inconspicuous industrial strips. The burglars came in the early morning hours, and either cut electricity to the cameras and alarms or smashed through walls to avoid them.
The experiences of these MRBs in Washington were not new or unique. Since 2010, MRBs in Colorado have been installing alarms and surveillance systems, and securing cash in floor-bolted safes, in an effort to limit losses from burglaries and robberies. In a six-month stretch from late 2013 to 2014, Colorado MRBs experienced numerous robberies that varied in method, ranging from threatening employees with bear mace, to breaking down walls with an ax and taking a saw to the store’s safe, to an old-fashioned stickup at gunpoint. Some criminals have resorted to significantly more violent means of robbing MRB owners. And the risks have not abated. In September 2019, the Denver Police Department announced that it detected an increase in burglaries at MRBs and recommended a bevy of proactive security measures. These thefts can result in massive financial loss to MRBs, which are often uninsured and thus must pay for their losses out-of-pocket.
As former Denver District Attorney Mitch Morrissey noted, “[y]ou hit a 7-Eleven, you’ll get [twenty] bucks. You hit a dispensary, you’ll get $300,000 on a good day.”
The reason that MRBs have been, and remain, such a tempting target for criminals is that they are largely unable to use banking services due to federal anti-money laundering laws. These laws apply to these businesses because marijuana is a controlled substance under federal law. As a result, because many MRBs cannot open bank accounts, they are forced to operate as cash-only businesses and hold large amounts of currency on their premises, creating tempting targets for criminals looking for big scores. This state of affairs raises concerns about public safety and financial transparency in MRB operations. Since there is no paper-trail created by banking records, there is greater potential for MRBs to improperly report their proceeds.