Pot Shops Can’t Take American Express or Deposit in Banks

Every month, Elliott Klug or one of his business partners walks into the Colorado Revenue Department with a messenger bag holding thousands of dollars in cash, and watches as state employees start counting.

Klug, co-founder of PinkHouse Blooms LLC, a chain of five medical-marijuana dispensaries in Denver, has to pay his sales taxes in cash because federal law bars banks from offering accounts to pot shops, even as Colorado allows and taxes them.

“It highlights the awkward situation we’ve been placed in,” Klug, 36, said. “We are paying taxes, but despite our best efforts to be good citizens, we’re still paying in cash.”

Colorado is among 18 states that allow the medical use of marijuana, and 11 that permit sales through dispensaries like Klug’s. But federal law labels the drug a controlled substance and requires banks to report related transactions as suspicious activity. The inconsistency creates a grey area for dispensary operators, who have to choose between operating as a cash-only business, susceptible to robbery, or finding creative ways to open checking accounts and accept credit and debit cards.

– Read the entire article at Bloomberg News.