If the stock market is to be believed, Colorado pot profits have skyrocketed. However, there is a very real problem with that.
Namely, banks are not willing to take money made off marijuana due to its Schedule I designation under the Controlled Substance Act of 1970. As such, marijuana dispensaries operate on a completely cash basis.
If the banks did accept the money, there would be major fines at a minimum—charges of money laundering and jail time are not out of the question, either.
So, naturally, those banks and credit unions are not too keen on taking money that will land them in hot water. As a result, many marijuana-related businesses are creating false bank accounts to get around both bank and federal suspicions.
False names, false business entities, cash deposits under $10,000, strategically closed accounts…
Speaking of which, the legality issue also makes getting a line of credit impossible.
That means dispensary owners have to carry around grocery bags worth of money every few days, and make deposits to the Department of Revenue, gathering a receipt in exchange. However, these receipts do not make for entirely convincing financial records to outside investors and entrepreneurs who have been courting the idea of a marijuana-based business.
This is bad for the vendors, but it also creates issues for the states as a whole. Having such a huge amount of cash floating around is potentially harmful for the economies of the given states. Having cash-only transactions makes tracking money very difficult (which is why they do it in the first place). It also prevents businesses and governments from using some of that cash once it is sitting in the DoR, and makes determining economic health in a region largely a guessing game.
Further, tax issues are at the forefront. Ironically, this was the major counterargument that advocates used in swaying voters to legalize marijuana. Both following the trails of cash-only transactions, and taxing something that is not supposed to be legal anyways (in the eyes of the federal government), means that the huge selling point of the new law is irrelevant.
So what is the point of all this? Without official federal compliance, Washington and Colorado pot profits mean nothing. It does not serve the community, it causes mass confusion and ties up resources in an attempt to clarify the legal issues, and it increases the likelihood for crime and violence with owners carrying garbage bags of cash every few days from known whereabouts.
So, is all of that worth people being able to get loaded? Although it is still too early to tell for sure, it looks like this grand experiment has yet to deliver on any promise, other than a lot of people being high.
Decriminalization is one thing, but making recreational marijuana has proved so far to be the enormous headache many opponents imagined.
Washington and Colorado Pot Profits
What are your thoughts on the Washington and Colorado pot profits? Was this a case of putting the cart before the horse? Let us know in the comments!