Last month, two states voted to legalize recreational marijuana. A bunch of others states have already legalized medical marijuana. Not surprisingly, there are legitimate, legal (at least under state law) marijuana entrepreneurs trying to start businesses around the country. On today's show, we discover the one big thing that's standing in their way: getting a bank account. And we learn how hard it is to run a business on cash alone.
NPR Morning Edition
It's Legal To Sell Marijuana in Washington. But try Telling That To A Bank.
November 16, 2012
John Davis, who runs a legal medical marijuana business in Washington state. He described one of the big hurdles of starting a legal marijuana business: It's really hard to get a bank account. His story reveals not only the gray area the marijuana business still inhabits (it's still illegal under federal law), but also just how hard it is to run a small business without a bank.
Here are four key steps Davis recommends, based on his own experience:
1. Buy three safes. One for "bulk product," one for "inventoried, ready-for-sale product," and one for cash. "If you put your cash in with the cannabis, it will end up smelling like cannabis, and when you go down to the bank, I guarantee you're going to have a talk with the manager of that bank."
2. Get an ATM — and be prepared to stock it with cash yourself. Credit card companies may not want to do business with you. Same goes for the companies that run ATMs in small businesses. "The companies that traditionally maintain ATMs will not stock your cash," Davis says. "Why? Because it's possible that the federal government will come, break down the door and take that cash."
3. Find angel investors. No bank is going to give you a loan to start a weed shop, even if it's legal.
4. Create a shell company. Banks don't want to do business with weed shops. But they don't mind opening accounts for legal corporations whose business dealings are vague. "I had to be colorful with the way that I opened my account," Davis said. "I don't feel great about having to toy with the truth, but it's essential for me to have banking. I'm a business."
Peter Tosh - Legalize It
Legalize It is an album and song by Peter Tosh. Legalize It was Tosh's debut album as a solo artist after leaving the Wailers. It was recorded at Treasure Isle and Randy's Kingston, Jamaica in 1975 and released in 1976.
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