Federal Drug Laws Force Pot Shops To Carry Lots of Cash and No Insurance. Now They’re Getting Robbed.

In recent weeks, several Bay Area businesses were robbed in smash-and-grab robberies. Oakland’s cannabis businesses were particularly hard hit. To make matters worse, these cannabis retailers have been further disadvantaged thanks to misguided federal drug laws.

California law makes cannabis legal, while federal law prohibits it. Many cannabis companies in Golden State have difficulty securing banking or insurance services. Businesses without access to banking services are not able to use checks, debit or credit cards and cannot take cash. They become easy targets for thieves. Additionally, businesses without insurance are likely to face further difficulties in the event of a robbery.

Alphonso “Tucky” Blunt Jr. is the operator and owner of Blunts and Moore. Blunts and Moore opened its retail cannabis shop in Oakland in 2018. According to the Equity Permit program, half of cannabis licenses are reserved for people who have had a conviction and/or live in heavily policed areas.

Blunt also employs three armed security guards to help protect his store. They can also be used to provide assistance to employees who need to carry cash. It is possible to make an electronic payment or request a bank certified check if a business has to pay a bill. For a cannabis-based business, however, this is a complicated task. Blunt had to take cash with him to different banks to pay his monthly rent. Because each bank has a dollar limit per transaction, it was not possible to send money to all of them. Blunt claims that the majority of cannabis companies don’t have “an abundance” cash on hand. However, he acknowledges that many people are unaware that this makes his store attractive to thieves.

Blunt also says that many insurance companies avoid marijuana-related businesses. This means that retailers such as his have to look to less trustworthy insurance providers that require customers to jump through “every hoops possible” in order to be reimbursed. Blunt claims that after the robbery of his store last summer, Blunt’s insurance paid just $26,000 out of $1 million, if not more, in damages.

This coverage level is unsustainable for many cannabis companies. Eduardo Whittington founded Lobo Cannagar in Oakland, which is a preroll blunt and joint maker. More than 12 masked intruders entered and stole Lobo Cannagar’s shared workspace for manufacturing on November 28.

Whittington does not have insurance for the facility. Whittington says that he chose to forgo insurance due to the numerous hassles and poor deals received by others in the sector. He says, “The squeeze isn’t worth it.” Whittington could have easily insured his cannabis facility even if he was selling alcohol, tobacco or other approved federal products. Whittington has been in legal cannabis business for years, so he is responsible for paying all costs. Recent robberys could have been hundreds of thousand of dollars.

These are not unique problems, and are not exclusive to Oakland. Even though cannabis companies find banks that are willing to partner with them, business owners tend to be reluctant to identify the banks publically, fearing the government might pressure them into closing the accounts. The Secure and Fair Enforcement Banking Act (SAFE Banking Act) was passed by the House of Representatives in both 2018 and 2019. This bill would relax the restrictions that discourage banks from accepting marijuana-related clients. It has been stalled by the Senate even though it was under Democratic control. This leaves hopeful cannabis companies in an unfortunate situation.

Robberies are always a risk to any company. However, when marijuana is involved, federal criminalization increases the severity of these risks. It is possible to solve this problem by allowing cannabis companies to trade in the open market, without being criminalized.