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Like their brethren in Colorado, the new marijuana stores in the state of Washington will be operating mostly on a cash basis, but operators hope that the federal government eventually will remove obstacles preventing them from getting payment card merchant accounts and business checking accounts.
On Monday, the Washington State Liquor Control Board issued the first 24 of what are expected to be more than 330 licenses for cannabis retailers. The licenses are the fruit of a ballot initiative known as Initiative 502 that Washington voters approved in the November 2012 election. The measure called for the creation of a system legalizing the growing, retail sale, and possession of small amounts of marijuana.
Tom Beckley, owner of Top Shelf Cannabis in Bellingham, Wash., is one of the first licensees. “It’s definitely overwhelming,” Beckley tells Digital Transactions News. He plans to open his store at 8:00 a.m. Tuesday, the first day for legal sales.
But his customers won’t be able to use their credit or debit cards, because he doesn’t have a payment card merchant account. “It’s going to be cash to start off with, there really is no other option right now,” he says.
No financial institution was willing to step forward and offer Top Shelf Cannabis a merchant account. Beckley can’t even get a business checking account. “I’ve talked to numerous banks, credit unions … they’ve all said they want to.”
Beckley says the reason he can’t get financial services is “federal regulations.”
By that, he means the conflict between state and federal law, the latter of which still considers sale and possession of cannabis a crime. The U.S. departments of Justice and Treasury in the past year appeared to open the door to more lenient treatment of the marijuana industry and its customers in states where cannabis is legal, but the banking industry says the feds haven’t gone far enough. Many observers say that until Congress clears the way with definitive legislation, financial institutions fearful of running afoul of federal law by supporting illegal businesses will continue to shun the marijuana industry.
Until the issue is resolved, Beckley and his two financial backers will be putting cash from daily sales in a safe for temporary storage, after which it will be transported to locations he wouldn’t identify.
Another new licensee, The Happy Crop Shoppe in East Wenatchee, Wash., also will be operating in cash.
“Cash is our primary form of payment at the moment,” says Lisa, the store’s managing member who did not want to state her last name. “We are looking for solutions.”
Like Top Shelf Cannabis, the Happy Crop Shoppe does not have a merchant or business checking account. “It’s a hurdle that we just will have to deal with,” says Lisa. She would not say how she and her partners will process the cash. To help boost sales, the store is trying to get an ATM installed at the store by its planned July 14 opening.
Despite the conflicts between state and federal marijuana laws, the cannabis industry is making some progress in moving away from cash. In Washington, Spokane Valley-based Numerica Credit Union and Seattle’s Salal Credit Union are providing financial services to processors and growers, but not to retailers, according to press reports.
In Colorado, Gov. John Hickenlooper last month signed HB-14 1398, a measure that paves the way for the creation of uninsured cooperatives that could provide basic financial services to pot businesses.
