Pot shops face ATM issues


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Recreational marijuana sales are now legal in Colorado, but the industry isn't out of the woods. 

Federal banking regulations have prevented most dispensaries from opening up business accounts to store their green, which in turn means that those shops are only able to accept paper money. This practice isn't without its dangers: with the amount of sales the companies are racking up, they've become a natural target for crooks, and many have had to resort to disguises and ruses just to get their cash out safely. 

There's also the hassle to the customers. Digital transactions are quickly gaining prominence, and fewer people are liable to regularly carry the sort of cash necessary to make purchases at pot shops. Having on-premises ATMs seems like a natural solution, but this process has been hampered by the inherent difficulty in adhering to KYC requirements. 

The worry is that shady elements could begin using the ATMs at pot shops to launder illicitly obtained money. What makes the situation even stickier is the lack of central oversight for the machines. While there are thousands of them across the state, not one single entity has a centralized list of who owns them or where they are. 

Jeff Sweetin, a retired former agent in charge of the U.S. Drug Enforcement Administration in Colorado, was blunt in describing the potential for criminals to abuse this system. 

"That's not only a disaster waiting to happen; it's a disaster that will happen," said Sweetin. "It's almost an ideal way for the criminal element to operate. Any time you have an easy ability to move large amounts of cash into the system without checks and balances … you're wide open."

The discrepancy between federal and state laws regarding marijuana has exacerbated the issue. Legislators refuse to openly discuss new potential regulations for fear of running afoul of government stipulations. Thus, money laundering remains a pressing issue: if a criminal enterprise owns or operates a machine that accepts fraudulent bills, they can easily circulate that dirty currency without fear of reprisal. 

While this is true for ATMs at a variety of establishments, including restaurants and bars, there are two primary differences that set pot shops apart. First, since they deal exclusively in cash, they have a monetary volume that is virtually unparalleled. Secondly, the legal grey area that they operate in has effectively hamstrung any sort of legislative cooperation.