Dozens of dispensaries in Colorado have set up “shadow” banking systems that allow them to accept credit and debit cards from customers – even though such practices could set them up for potential money laundering charges, according to a report by a local TV station.
Fox31 Denver found that 47% of 78 state-licensed dispensaries it polled reported being able to take credit and debit cards.
While medical marijuana companies have been using shadow banking systems for years, the high percentage employing it in Colorado surprised some banking experts, according to the report.
And conversely, the name of the actual shop where the customer makes a purchase isn’t reflected on a credit or debit card statement – or on the receipt from the purchase.
Federal regulators haven’t shown a desire to actually target vendors that employ this strategy. If a bank or credit card company finds out, though, the account is often terminated.
Cannabis industry workers and executives can earn more than their mainstream counterparts.
Properly prepared administrative service agreements where the administrative portion of the dispensary operations are handled by the “shadow” corporation add some legitimacy to the use of the “shadow” corp and may reduce the risk of being accused of money laundering. It’s risky yet has created a biz niche as well.
It’s such a shame that the industry MUST turn to such tactics. And the scrutiny is not limited to dispensaries — we’ve also been turned away by credit card processors and don’t touch the plant.
This sounds exactly like Federal money-laundering. This is why Colorado’s greed and stupidity will spell an end to the national recreational marijuana legalization movement.