Tag: banking

Why Cannabis and Cryptocurrency Have Yet to Hit It Off

Late this summer, a former Miss Iowa and rapper The Game did what models and hip-hop stars apparently do these days: They launched a new cryptocurrency they hope will one day be used to buy and sell all things cannabis.

On Sept. 15, the founders of ParagonCoin—Jessica Versteeg, who was Miss Iowa in 2014, and her husband, Russian millionaire Egor Lavrov—began offering $100 million worth of ParagonCoins at $1 apiece. Even before the ICO (initial coin offering (or ICO, when a cryptocurrency is first put up for sale) the company had raised a cool $25 million from investors.

“There’s a lot of sound and fury, but it doesn’t signify as much for the cannabis industry as one might believe.”

John Downs, The Arcview Group

And why not? There are more than a few reasons cryptocurrency has been among the hottest topics this year—including Bitcoin’s climb to an all-time high of more than $5,800 in September. There is, it seems, a lot of money to be made in making digital money.

Not that ParagonCoin was the first to have the idea. It wasn’t even the first to target cannabis. Since Bitcoin came out of obscurity around 2010, at least eight cryptocurrencies have emerged with the aim of serving the cannabis economy, a market largely cut off from traditional banking.

Even with catchy headlines, it’s hard to keep track of them all. Remember the cryptocurrency that sponsoring Dennis Rodman’s trip to North Korea? That was PotCoin, which we’ve written about. There’s also CannabisCoin, GreenMed.io, MetalPay, HempCoin, DopeCoin, and WeedCoin.

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It might seem a match made in heaven: cash-flush industry rejected by banks meets untraceable monetary system. Yet cryptocurrencies and cannabis have yet to hit it off. From seed to sale, business is still almost entirely done in cash. Despite attractive spokespeople and large dollar figures, the digital currencies have not caught fire with consumers.

“There’s a lot of sound and fury, but it doesn’t signify as much for the cannabis industry as one might believe if they just read the headlines,” said John Downs, director of business development at The Arcview Group, a cannabis consulting firm.

Is it even worth the fuss? Absolutely—at least for whoever cracks the market first, said Cory Flanigan, chief technology officer of Tokken, a mobile payment system that got its start in the cannabis industry. “If someone could gain market share, they’d be the only game in town and they’d be phenomenally successful.”

Why a Cannabis Cryptocurrency?

From a consumer standpoint, the advantages of using cryptocurrency versus cash appear marginal. One benefit, cryptocurrency proponents point out, is low fees—or none at all. But why bother buying cryptocurrency and fussing an app on your phone if you can find an ATM and throw down green? Perhaps that’s why consumers haven’t taken to it. Though cryptocurrency is reportedly accepted at some dispensaries, few people are actually using it.

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“We have a bunch of shops that accept DopeCoin, but no one uses it,” says Adam Howell, creator of DopeCoin, which has been available since 2014. “I haven’t seen one actual dispensary or marijuana company use one of these marijuana cryptocurrencies to store their money or conduct daily business. It’s more of a gimmick at this point.”

“You’re looking at a tiny percentage of people who use this technology.”

Sumit Mehta, Mazakali

So what gives?

“Everyone’s here to grab cash,” Howell said.

Flanigan has another take. “It’s kind of flashy, kind of sexy,” he acknowledged, “but I can also appreciate the idea that it makes sense to build a network for cannabis businesses.”

Creating a coin and selling it to the public is a smart way to raise capital—something that’s notoriously difficult to do in the cannabis sector, Flanigan says.

ParagonCoin, for instance, plans to use its newfound cash to establish co-working spaces that can be paid for with its currency. (Paragon didn’t respond to multiple requests for comment, but you can read the company’s raison d’être in its own words in a white paper on the company’s website.)

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“It’s a savvy move for fundraising. By building their own coin to sell to speculators, they can raise a bunch of money to achieve their vision,” Flanigan says. If the coins see appreciation that looks anything like Bitcoin’s, businesses will be able to cover rent—and many other things—for a very long time.

Still, does the market really need so many different kinds of canna-coin?

As with any upstart industry, some companies will try in earnest and fail because of regulations or economics. But Flanigan said it seems there’s another category in this industry: “Smoke and mirrors by someone trying to put up enough capital to appear convincing but they don’t really have the wherewithal to implement anything.” he said. “It’s tough to know upfront which is which.”

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The Crypto- Conundrum

Worldwide, there are only 12 million users of cryptocurrency, says Sumit Mehta of the firm Mazakali, publisher of cannabis industry report Mazakali Green Paper. “Compared to numbers of bank accounts and global GDP, you’re looking at a tiny percentage of people who use this technology.”

It may be possible that cannabis cryptocurrencies have floundered not because the technology lacks appeal but simply because the technology is new to so many people.

Not that wider adoption would necessarily solve all of cryptocurrency’s problems. No matter how many consumers might adopt it, they would all face the same issue when converting digital coins into US dollars: questions from the taxman about the money’s origins. Users have to disclose their identity and the source of the funds in order to avoid running afoul of the law.

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“How do you get around that?” Downs said. “There’s no way. It’s a fatal flaw.”

“To think a marijuana coin is going to pioneer getting people to use cryptocurrency is a mistake.”

Adam Howell, DopeCoin creator

All this makes for a conundrum the cannabis world has yet to crack: If the sector wants to be treated like any other legitimate industry, should cannabis really embrace currencies that allow business to take place in the shadows?

“By its definition it takes away the ability for the government to exercise monetary policy,” said Mehta. “I don’t know that it’s wise to embrace something that takes away the power of the government if we’re trying to play nice with it.”

As far as regulators go, there’s some ambivalence: Washington state has given its blessing to the use of cryptocurrencies in the state’s legal cannabis market. At the same time, lawmakers have also proposed banning it.

“It feels like the cryptocurrency solution is a little bit of fool’s gold in that you’re just going to draw additional regulatory scrutiny and have more eyeballs looking more closely at you,” Downs said.

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Here’s another question to which not everyone agrees: If you want a cash alternative, why is it necessary to have a cannabis-specific cryptocurrency rather than all-purpose one like Bitcoin or Ethereum? That’s a head-scratcher for Mehta. “I don’t fully understand why that matters,” he said.

Howell said he believes cannabis and cryptocurrency have a bright future together, but that the future has yet to arrive. “Once we hit the tipping point where Bitcoin is mainstream, I can see altcoins following suit,” he said. “But to think a marijuana coin is going to pioneer getting people to use cryptocurrency is a mistake.”

Why Blockchain?

Though they are not the same thing, cryptocurrency is often mentioned in the same breath as blockchain. A blockchain is a secure, encrypted ledger—a verified trail of information that can be attached to anything, from money to a cannabis plant to a jar of mayonnaise.

IBM recently made a splash with news it’s eyeing blockchains as a way to track cannabis.

While blockchains are useful on their own for tracking any kind of transaction or the movement of products, they make an ideal foundation for cryptocurrencies. Indeed, every cryptocurrency is built upon a blockchain, meaning all are tracked by an immutable ledger. And instead of being hosted on a central server, as bank ledgers generally are, blockchains are hosted on numerous computers. The redundancy of the system means they’re not dependent on a central entity, and it makes them far less susceptible to hacking.

Any expert will agree: Blockchains are nearly certain to revolutionize the way products are tracked, regardless of the industry. The technology is as likely to follow coffee beans as cannabis buds. In what will likely be a highly regulated industry, it’s easy to see the applicability to cannabis: a secure trail of information—useful to both regulators and customers—that follows a plant from seed to sale.

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It’s not just startups getting into the blockchain game. Tech giant IBM recently made a splash with news that it’s eyeing a place in the legal cannabis ecosystem as the producer of blockchains to track cannabis. The company reportedly submitted a proposal to the provincial government of British Columbia to create a blockchain-based tracking system.

What’s up With All the ICO’s?

For anyone thinking of investing in an ICO, consider this: With all the headlines and fast money that cryptocurrencies have been making, it’s not surprising to learn that a Nobel-prize winning economist believes they’re currently experiencing a bubble. And someone who really knows what they’re talking about when it comes to scams—the Wolf of Wall Street guy, Jordan Belfort—says digital currencies are “a massive scam of the highest order.”

On its website, Forbes includes this almost comical caveat with every story about cryptocurrencies:

Ed note: Investing in cryptocoins or tokens is highly speculative, and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.

For better or for worse, the SEC is also eyeing overseeing ICOs, which could change things dramatically.

Will cryptocurrencies be the banking solution the cannabis industry is looking for? Maybe one day. But with so many questions—and other emerging alternatives for cannabis banking—that day may never come.


Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.

California Proposes Armored Cars to Transport Cannabis Tax Money

LOS ANGELES (AP) — California should use armored cars to transport hundreds of millions of dollars in cash tax payments expected next year with the state’s legal marijuana market, the state treasurer said Tuesday.

The state on Jan. 1 will enter a new era with cannabis when recreational sales become legal and join the long-standing medical industry in what will become the largest U.S. legal pot economy.

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But the new market estimated to grow to $7 billion annually has a troubling flaw: Marijuana remains illegal under federal law, so most banks won’t do business with growers, manufacturers or retailers. That means marijuana companies typically operate only in cash, including their tax payments that will be 15 percent of sales to the state of California.

State Treasurer John Chiang formed a task force to work on a solution for gathering the money because the state expects to collect hundreds of millions of dollars from cannabis sales next year.

The armored car tax collection solution came about amid fears that operators carrying large bags of cash could be targets for theft and create problems for the state workers collecting and counting the money.

In a report based on the findings of the state’s Cannabis Banking Working Group, Chiang also said that changes are needed in Washington to either legalize cannabis in the U.S., or shield financial institutions that serve the cannabis industry from possible prosecution.

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But that seems unlikely anytime soon, so the report recommended:

  • The state should work with banks to contract an armored courier service to collect tax payments made in cash from businesses, and shuttle those payments to a secure counting facility before it’s eventually deposited in state accounts. “Armored courier services would eliminate the need to directly handle large sums of cash at branch offices or open deposit accounts at financial institutions,” the report said. It wasn’t immediately clear who would pay for the service.
  • Conducting a study on the potential to create a public cannabis bank or other financial institution to serve the industry. The report warned that the obstacles to creating a public financial institution are “formidable,” including unknown startup costs, the probability of losses for several years or more that taxpayers would have to cover and trouble obtaining federal regulatory approval.
  • Forming a group of cannabis-friendly states, businesses and banks to push for changes in Washington for improved banking access for the industry that would reduce or eliminate the need for marijuana businesses to use cash.
  • To encourage greater access to banks, state and local governments should create an online portal to collect data on cannabis businesses. It would be designed to help banks assess potential customers and include licensing and regulatory information, data on key personnel, sources of supply and financial records.

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Chiang warned in a letter accompanying the recommendations that “the clash between state and federal law threatens to cripple legal California cannabis businesses before they even get up and running.”

“The inability of cannabis operations to get banking services means that many of them may remain in the underground economy and not become transparent, regulated, tax-paying businesses, as California voters intended,” he said.

During the Obama administration, the Justice Department issued guidelines to help banks avoid federal prosecution when dealing with marijuana businesses in states where the drug is legal.

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But most banks don’t see those rules as a legal protection against charges that could include aiding drug trafficking. And they say the rules are hard to follow, in effect placing the burden on banks to determine if a business is operating legally.

The number of banks and credit unions willing to handle cannabis money is growing. But they still represent only a tiny fraction of the industry.

Colorado tried in 2015 to set up a credit union to serve the marijuana industry but was blocked by the Federal Reserve.


Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.

Uruguay Setting up New Cannabis Shops After Challenge by Banks

MONTEVIDEO, Uruguay (AP) — Uruguay’s government announced Wednesday that it is changing its retail system for legalized marijuana because banks are making it difficult for pharmacies to sell cannabis as planned.

At least three pharmacies have decided not to sell cannabis after warnings by banks.

Banks are refusing to deal with companies linked to cannabis in order to follow international financial laws that ban receiving money tied to the drug, pharmacists and officials said.

To avoid the problems faced by pharmacies, Uruguay will set up shops to sell marijuana for cash, said government official Juan Andres Roballo.

In July, marijuana went on sale at 16 pharmacies under a 2013 law that made Uruguay the first nation to legalize a cannabis market covering the entire chain from plants to purchase. Since then, at least three pharmacies have decided not to sell cannabis after warnings by banks.

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Running a business without being able to bank is tough in Uruguay. Among other things, Uruguayan law bans cash or check payments for employees and requires that salaries be paid by direct deposit.

Some U.S. marijuana retailers in states that have legalized sales have encountered similar banking difficulties as the drug remains illegal on a federal level.


Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.

Hawaii Says It’s 1st State to Go Cashless for Cannabis Sales

HONOLULU (AP) — Hawaii said Tuesday that it will be the first state to require marijuana sales to be handled without cash, saying it wanted to avoid robberies and other crimes targeting dispensaries.

Medical marijuana dispensaries in Hawaii won’t be allowed to accept cash beginning Oct. 1 and will require people to use a debit payment app instead. The app is already an option for marijuana transactions in six states, including California and Colorado.

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Many marijuana businesses use cash because banks fear cannabis money could expose them to legal trouble from the U.S. government, which regulates banking and still bans marijuana.

The debit app called CanPay uses a Colorado-based credit union to facilitate transactions. Some mainland credit unions have opened accounts for cannabis businesses.

Hawaii was among the first states to legalize medical marijuana in 2000 but the state didn’t grant licenses to any dispensaries until last year. Maui Grown Therapies became the first to open last month after the state Department of Health gave it approval to begin sales.

During the Obama administration, the Justice Department issued guidelines to help banks avoid federal prosecution when dealing with cannabis businesses in states where the drug is legal.

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But most banks don’t see those rules as a shield against charges that could include aiding drug trafficking. And they say the rules are difficult to follow, placing the burden on banks to determine if a cannabis business is operating within the law.

There is also uncertainty over how the Trump administration will react. Attorney General Jeff Sessions has said he wants to crack down on the legal marijuana industry.

Credit card companies like Visa and Mastercard say they won’t allow their cards to be used to buy cannabis or marijuana-related products.

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Patients who don’t own smartphones will have to create CanPay accounts with an email address and personal identification number. Patients will be able buy cannabis by logging on to their accounts with computer tablets at the dispensaries.


Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.

Congressman Heck Introduces Marijuana Banking Amendments

Congressman Heck Introduces Marijuana Banking Amendments | NORML

WASHINGTON, DC — Congressman Denny Heck (D-WA) with Representatives Ed Perlmutter (D-CO), Barbara Lee (D-CA), and Dina Titus (D-NV) have submitted two amendments to the financial services division to be included in the House appropriations bill. Both of these amendments focus on banking services for legal marijuana-related businesses and would be a temporary fix until […]

Congressman Heck Introduces Marijuana Banking Amendments | The Daily Chronic


Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.

Would a ‘Public Cannabis Bank’ Really Work in California?

Most cannabis business owners eventually confront the stresses of working in an all-cash environment. If you’re lucky, you’ve found one of the 368 reported banks or credit unions providing limited services to the industry under FinCEN guidelines. You might be experimenting with more exotic solutions like cryptocurrencies or pre-paid services like Tommy Chong’s Green Card. In the past few months, a bold new financial project has re-emerged from Occupy-inspired economic circles to captivate city councils, state treasurers and weary cannabis industry entrepreneurs: the public bank.

‘A multi-billion dollar cannabis industry could be the catalyst that propels public banking into becoming a reality.’

John Chiang, California State Treasurer

A public bank is a bank fully owned and operated by the state or municipal government within which it operates. Instead of depositing its money in a third-party bank owned by private interests and insured by the FDIC, the state or city deposits and insures the public bank’s money and builds up its own assets. A public bank can choose whether or not to engage with the Federal Reserve system, which means it could possibly provide a suitable home for the cannabis industry’s cash.

A lot of the action around public banking and cannabis right now is happening in California. The state’s Cannabis Banking Working Group, chaired by State Treasurer and gubernatorial candidate John Chiang, devoted an entire session to the public banking option on August 10th.

“The emergence of a multi-billion dollar cannabis industry could well be the catalyst that propels public banking into becoming a reality,” Chiang said to open that session. “We are here to test the idea and see if it’s truly workable.” His comments have been prefaced by similar considerations of the concept in San Francisco, Oakland, and most recently in Los Angeles.

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Public banks are nothing new, either in the United States or internationally. Beginning in rudimentary fashion with the rise of colonial “land banks,” public banks were developed within the states of Alabama, Kentucky, Illinois, Vermont, Georgia, Tennessee and South Carolina, and countries such as Argentina, Malaysia and China currently maintain their own state-run banks. However, the only US public bank currently in existence is the Bank of North Dakota.

Founded in 1919 as a populist alternative to national banks that had reduced their willingness to lend to local farmers, the Bank of North Dakota now controls over $7 billion in assets and $876 million in capital, returning 46% of its earnings to the state every year. It famously occupied the financial high ground during the 2008 meltdown, which kickstarted the current public bank revival.

The Bank of North Dakota refused comment on both the current resurgence of interest or its own relationship to North Dakota’s imminent medical marijuana program. Because the Bank of North Dakota maintains a master account with the Federal Reserve, it probably won’t accept cannabis deposits unless expressly mandated by the state of North Dakota.

Other states have studied the Bank of North Dakota model. Not all have come away impressed. At the Working Group session, former commissioner of the Massachusetts Division of Banks David Cotney cited his state’s 2011 feasibility study, which determined that BND’s model was inapplicable for a state as large and economically and financially diverse as Massachusetts, to say nothing of a state the size of California, which contains the world’s sixth largest economy.

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What Would It Take?

Creating a public bank, even one that would be constructed to accept cannabis business deposits as well as provide merchant services, would be an extremely heavy lift. Banking experts have commented on the extraordinary levels of capitalization needed for such an effort. For the Los Angeles bank alone, initial capitalization costs are estimated between $125 million to $250 million for a bank with $1-2 billion in assets, for starters.

Before founding the cannabis legislation database CannaRegs, Amanda Ostrowski worked as a bank examiner for the Federal Reserve, which informs her perspective on the road ahead. “The number of different things a bank has to pass through, it’s not just simple stress tests,” she said recently. “It’s safety and soundness exams, consumer lending compliance, there’s so many different factors that go in… There’s a reason why the federal reserve is still refining the systems and equations to this day and why these examiners go through at least two years of training before they’re certified examiners. And to put that kind of infrastructure into place from the ground up is going to be extremely costly.”

Using that logic, Ostrowski believes getting a cannabis bank up and running would take more time and effort than the industry can spare. As several speakers at the Working Group noted, absent a master account from the Federal Reserve and access to the fedwire, a cannabis bank would merely serve as a vault that couldn’t even complete intrastate transactions with other banks.

Adam Johnson, author of the investment newsletter Bullseye Brief, elaborates: “There are very few banks that are chartered solely within state lines, which means that they’re by definition unable to handle transactions across a state line where it would certainly become illegal transfer.”

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Harborside Is Interested

But some in the industry think well enough of the project to occupy a seat at the table, most notably Harborside Medical Center co-founder Dress Wedding. In addition to serving as Harborside’s Director of Holistic Services, he also volunteers at the advocacy group Friends of the Public Bank in Oakland.

Harborside has not officially endorsed the public bank initiative. But Wedding supports the social and economic justice elements of the public bank, and argues for a bank business plan that would apply for a master account and commingle municipal and cannabis funds.

He is seconded by Matt Stannard, Policy Director of Commonomics USA, who told the Working Group: “What a public bank can do is really  stare in the face of whatever existing guidelines, however ambiguous or however contingent those federal guidelines might be… and say, ‘We are going to do everything and beyond that these non-regulatory guidelines [such as the Cole Memo and the FinCEN guidelines] ask of us.’”

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The possibility that the Federal Reserve would grant an account to such an application is remote. But so was the idea of a legal cannabis industry 20 years ago. The current cannabis-based public banking initiatives are stuck in feasibility study mode, but Ostrowski feels that the acceptance of some potential variation of this perennial economic moonshot could be catalyzed out of necessity. Its impact could extend well beyond cannabis.

“There’s a lot of these things in history,” said Ostrowski. “They were built to solve one problem [and they] balloon and become the new way. If it works and it makes sense, then who knows? Maybe this is a model that goes all the way through, but we’ve got to look at the costs and the general impacts on society.”


Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.

‘First Green Bank’ Is Florida’s First to Serve Cannabis Industry

Orlando-based First Green Bank is giving new meaning to its name by offering financial services to cannabis businesses. It appears to be the first financial institution in Florida to serve the state’s medical cannabis industry.

While most major US banks have steered clear of cannabis companies due to convoluted rules around working with the still-federally-illegal industry, First Green Bank has more than just a commercial connection to cannabis. Founder Ken La Roe credits medical marijuana with helping his wife after suffered a serious bicycle crash that left her with traumatic brain injuries and a seizure disorder, according to the Orlando Business Journal.

A friend suggested medical marijuana. The results were stunning. “In six months [she] was able to completely get off the seizure medication, and six months later it completely cured her seizures,” Ken La Roe told Fox 35 Orlando.

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La Roe told reporters he believes his bank is the first in Florida to offer banking services to cannabis businesses. While some states, such as Washington, have issued guidance on how local financial organizations can work with the cannabis industry, Florida currently lacks guidelines around how banks should go about doing business with dispensaries.

“There is no rule or law because it’s federally illegal,” La Roe said.

As La Roe explained to the Orlando Business Journal, First Green Bank won’t actually touch any of the cash from dispensaries.

“We don’t ever touch the cash or allow dispensaries to deposit it,” said. “We require them to use the armored car service we have vetted to go to the dispensaries.”

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The armored trucks pick up the cash directly from dispensaries, then transport it to the nearest Federal Reserve location, La Roe explained. First Green Bank also tracks inventory from seed to sale, as it’s the bank’s responsibility to make sure all the transactions are above board.

The process hasn’t been easy. According to news reports, it’s taken La Roe and First Green Bank around two years to implement this system. Today, First Green Bank serves six of the seven licensees in Florida.

So far, First Green Bank has processed nearly $30 million dollars in deposits from cannabis companies. That’s about 6% of the bank’s $479.38 million in total deposits from all customers during 2016.

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Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.

State Lawmakers’ Group Urges Feds to Deschedule Cannabis

In a sign that state lawmakers across the US are warming to the idea of legalization, the National Conference of State Legislatures is urging the federal government to remove cannabis from the Controlled Substances Act (CSA) and allow states to set their own policies around the plant.

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Not only would such a move respect the will of individual states, the group argues in a resolution adopted Monday, it would also improve public safety by easing cannabis businesses’ access to banking services. Because federally insured banks can face penalties for working with the industry, many companies still operate in cash, making them a prime target for theft and robbery.

“State legislators and the vast majority of voters agree that marijuana policy should be left to the states.”

Karen O’Keefe, Marijuana Policy Project

The resolution says the group “believes that the Controlled Substances Act should be amended to remove cannabis from scheduling thus enabling financial institutions the ability to provide banking services to cannabis related businesses.”

It’s the third time in as many years that the National Conference of State Legislators (NCSL) has called for cannabis reform at the federal level. Last year the group approved a resolution calling for the removal of cannabis from Schedule I of the CSA, and a 2015 resolution urged that “federal laws, including the Controlled Substances Act, should be amended to explicitly allow states to set their own marijuana and hemp policies without federal interference.”

But while the latest resolution goes further than past iterations have, the NCSL emphasized that the document isn’t meant as a full-blown endorsement of legalization.

The group “acknowledges that each of its members will have differing and sometimes conflicting views of cannabis and how to regulate it,” the resolution continues, “but in allowing each state to craft its own regulations we may increase transparency, public safety, and economic development where it is wanted.”

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Legalization advocates applauded the measure as a sensible step forward.

“States should not have to worry about the federal government interfering with their marijuana policy choices,” Karen O’Keefe, director of state policies for the Marijuana Policy Project, said in a statement about the resolution. “State legislators and the vast majority of voters agree that marijuana policy should be left to the states.”

O’Keefe added that “legitimate, taxpaying marijuana businesses should not have to face the difficulties of operating on a cash-only basis. Allowing banks to offer them financial services will be good for the industry and benefit public safety.”

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A poll conducted last month by SurveyUSA for the advocacy organization Marijuana Majority found that 76% of Americans support individual states being able to make their own laws around cannabis use and sales. In a Quinnipiac survey released in April, 94% of Americans said they support allowing adult patients to use doctor-recommended medical cannabis, while 60% said they support adult-use legalization.

As Marijuana Majority founder Tom Angell noted Monday, the NCSL also considered a separate resolution that endorsed the idea that “medical cannabis can be an effective tool in combating the  national opioid crisis.”

The resolution, which the organization’s Health and Human Services Committee said it will vote on later this year, argues that “there is ample evidence that states that have medical cannabis programs have accomplished a significant reduction in the number of opioid related deaths with resulting fewer hospitalizations related to opioid related deaths in states that have passed medical cannabis programs.”


Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.

Inside a Nerve-Rattling Trip to Pay Cannabis Taxes in Los Angeles

LOS ANGELES (AP) — Jerred Kiloh’s eyes narrowed as he checked his mirror again. The black Chevy SUV with tinted windows was still behind him.

It had been hanging off Kiloh’s bumper ever since he nosed out of the parking lot behind his medical-marijuana dispensary with $40,131.88 in cash in the trunk of his hatchback.

Kiloh was unarmed, on his way to City Hall to make a monthly tax payment, and managing only stop-and-start progress in the midday traffic. He was afraid of one thing above all else: getting robbed.

That fear is a constant part of doing business in California’s flourishing medical cannabis industry, in which transactions are conducted mostly in cash, sometimes in stunningly large amounts.

The emerging marketplace with a projected $7 billion value has a potentially crippling flaw: Many people who work in it can’t use a bank.

“The thing I need the least right now is to have to go through any sort of money disappearing,” Kiloh said.

On Jan. 1, recreational pot will become legal in California, creating what could be the world’s largest legitimate marijuana economy. It comes more than two decades after the state gave its blessing to medical cannabis.

But the emerging marketplace with a projected $7 billion value has a potentially crippling flaw: Many people who work in it can’t use a bank. Banks don’t want the risks of doing business with companies whose product remains illegal under federal law.

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So while the sneaker shop next door to Kiloh’s storefront on Ventura Boulevard can send a check to City Hall to cover its taxes, or wire the money from a laptop, Kiloh has to make a stress-filled, 15-mile (24-kilometer) freeway drive each month to downtown Los Angeles.

California is to marijuana what Iowa is to corn, and what Kentucky is to bourbon — the nation’s bud basket, its heartland for production. The transformation of such a vast illegal economy into a legal one hasn’t been witnessed since the end of Prohibition in 1933.

The state expects to collect $1 billion in new tax revenue annually from pot within a few years. In L.A. — which is already estimated to have anywhere from 1,000 to 1,700 medical marijuana dispensaries, only about 200 of which paid city taxes in 2016 — the take is projected at $50 million next year alone.

However, governments will almost certainly miss out on money without an easy, secure way for businesses to pay. With no bank records, it will be harder to regulators to track funds and identify shady operators. And those who operate by the book will be undercut by those who don’t.

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Without banks, “everyone loses,” said Nicole Howell Neubert, a marijuana industry lawyer.

Kiloh, a 40-year-old with a graying mohawk and a degree in economics, counts 15 years in the pot industry as a seller and cultivator and is a partner and business manager at a San Francisco dispensary and the owner of the one in Los Angeles.

In the absence of a bank, Kiloh has become his own.

Kiloh avoids arriving at the same time each day and staggers the times he leaves. He goes in and out different doors. He keeps an eye on cars parked around his shop.

Twist and turn through a warren of rooms inside his shop, go through a door with a keypad lock, and you will come to a closet-like space that contains twin steel vaults, standing head-high. The walls around them are reinforced with steel.

Overhead, more than 50 cameras scan his offices and hallways and keep watch outside the building as well. An armed guard stands at the door to the sales floor.

On a typical day, $15,000 can change hands in his dispensary, where a steady stream of customers pick from shelves stocked with 700 products, from fragrant buds and perfectly rolled joints to cannabis-infused lip balm and potent concentrates known as “shatter” that look like thin sheets of amber glass.

For Kiloh, the cash is a daily hassle. It needs to be counted repeatedly to safeguard against loss. State and local taxes must be set aside and stored, sometimes for a month or more. When vendors show up, they get paid in cash, too.

“When now everyone makes payments through their cellphone, it’s tough to see that I’m left to the archaic version of counting money,” he said.

With all the cash on hand — he grossed $4 million last year — crime is a gnawing fear. His dispensary on a bustling commercial strip has been robbed twice — once by thieves breaking in through the roof.

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The Los Angeles Police Department did not immediately respond to a request for statistics on crimes against marijuana dispensaries, and many cases are believed to go unreported anyway, since many businesses are loath to go to the police.

Last year, though, a dispensary owner shot and wounded two armed men during a holdup in the Los Angeles suburbs. And a security guard at a dispensary was killed in an attempted robbery in Aurora, Colorado, another one of the nine states to legalize recreational pot.

To keep criminals guessing, Kiloh avoids arriving at the same time each day and staggers the times he leaves. He goes in and out different doors. He keeps an eye on cars parked around his shop.

Carrying $40,131.88 in cash in his shoulder bag, Kiloh enters the office of finance tax and permit division at Los Angeles City Hall. (AP Photo/Jae C. Hong)

Once a month, Kiloh telephones to make arrangements to drop off his tax payment at the city Finance Department, which gets 6 percent of his gross revenue. They want to know he’s coming — it’s dangerous for them, too. The agency has seen bags of cash from pot businesses as large as $300,000 come through the door.

His journey to the tax office starts at a windowless back room at his shop, where stacks of $20 bills flip through the counting machine at his desk with the whir-slap-whir-slap of a weed-whacker.

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He and his staff then wrap the bills into neat $2,000 bundles and wedge them into a long cardboard box, which is then covered in plain paper and stuffed into a shoulder bag that goes into the trunk.

From the moment he pulls out of his parking lot, he is watching, assessing.

“I find myself looking in my rear-view mirror hundreds of more times than I usually would in just normal traffic, making sure that I’m not being followed,” Kiloh said.

“That’s what a lot of this industry has been about: Just stay under the radar, and that’s your best defense. That’s your best kind of safety.”

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It was on Kiloh’s drive to City Hall in late June that he noticed the ominous-looking Chevy. He watched it intently, taking note of the man behind the wheel — glasses, mid-40s to 50s — as he leaned into the accelerator.

Eventually, the Chevy disappeared, but Kiloh wasn’t home free yet.

Exiting the freeway, he tried to enter a parking lot near City Hall but was turned away, forcing him farther down the block.

Once inside a garage, he looped around until he found a spot near a stairwell. Lifting his satchel from his trunk, he scurried toward the door.

Kiloh spotted a police officer walking across the plaza — an instant source of comfort.

“I try to not stay in confined places like an elevator, so I’d rather take the standard stairs, plus the standard stairs have video cameras,” he said.

The steps opened to a sun-soaked plaza teeming with people. With the cash over his shoulder, he made his way briskly toward City Hall, his head swiveling.

“It’s tough when people make eye contact with you,” he said. “There is always the fear of what do they know?”

Kiloh spotted a police officer walking across the plaza — an instant source of comfort.

Finally at the granite-faced tower, Kiloh darted up the steps and slipped behind a pair of glass-and-wood doors. He emerged about 20 minutes later, his tax bill paid, and drew in a slow, deep breath.

“You just feel the relief,” he said, “to know that I don’t have to look over my shoulder.”


Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.

LA Proposals Would Ban Most Dabs, Create Cannabis Bank

With adult-use cannabis sales set to kick off in California on Jan. 1, local governments like those in the city of Los Angeles are in a mad rush to get the regulatory kinks worked out.

The latest proposal out of LA City Hall, introduced by Council President Herb Wesson, would outlaw “volatile cannabis manufacturing,” which is currently the predominant form of extracting cannabis into concentrates used for dabbing or making edibles.

Cannabis industry experts told the LA Weekly the proposed ban would rob the city of tax dollars and push a lucrative component of the cannabis industry outside LA city boundaries.

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Most concerns around using volatile chemicals for cannabis extraction stem from amateur manufacturers using improper techniques, which can result in flammable gases flooding the extraction space. If sparked, the gas can then ignite and explode.

Amateur cannabis extraction using volatile chemicals is already illegal under state law. The LA measure would ban the practice even by qualified manufacturers.

David Sparer, CEO of Bay Area-based Refined Hydrocarbon Solutions, which makes solvents for cannabis extraction, told the Weekly that licensed cannabis-oil producers are on a different level of safety when it comes to producing the oils.

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“It’s perfectly safe when there’s a trained operator using high-quality materials,” said Sparer, who added that the company has been in discussions with city officials about what constitutes safe use. “If the City Council doesn’t allow this to happen in a highly regulated environment, the good players will go to outlying cities and the tax revenue will go with them. And it will still be sold in LA. Those bad players left will continue to blow things up.”

Some analysts have projected that concentrates will make up around 60% of the legal cannabis market in Southern California.

A Local Cannabis Bank?

In more promising news for the industry, Council President Wesson has also proposed setting up a municipal bank to enable businesses in the cannabis industry to open accounts and secure loans.

Limited access to banking services have hamstrung operators and caused headaches at local agencies that often must collect millions of dollars in taxes and fees—in cash. And as the LA Daily News points out, while LA accepts business tax payments in cash, the State Board of Equalization does not.

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Cannabis business owners, Wesson wrote in his proposal, “are going to go home tonight and sleep on a mattress that’s worth $2 million” while others “have a million and a half dollars in cash buried in the backyard.”

John Bartholomew, Humboldt County’s treasurer and tax collector, said that wasn’t a figure of speech. “We get lots of cash, and sometimes it has been washed—actually washed—because it had been buried out in the backyard,” he told the LA Times.

“We have to figure out a way to make this industry work,” Wesson wrote.

Wesson is expected to introduce a formal motion for his municipal bank proposal to the City Council’s Budget and Finance Committee.


Thank you for visiting MDMMCC.com, the premier Medical Marijuana Certification Center in Maryland. Our Mission at the Maryland Medical Marijuana Certification Clinics (MDMMCC) is to provide the certification necessary for qualified patients to obtain Medical Marijuana in compliance with the Maryland Medical Marijuana Laws in the State of Maryland.  MDMMCC will have offices open throughout Maryland.