Metal detectors at the front door, two armed security officers nearby and video surveillance monitoring inside and outside the business are becoming necessary security measures for anyone in the marijuana retail business in the city of San Diego.
Jay Araiza of Southwest Patient Group with a shop in San Ysidro says you can't be too prepared. “Part of our building is actually bulletproof as well,” Araiza said.
The store and its delivery service only deal in cash, no credit cards.
While Araiza was not comfortable discussing how much money his store deals with, he says the problems created by a cash-only business are not secret and “definitely of concern”.
The concerns and inherent risks behind operating a cash-only enterprise are beginning to help drive forward proposed legislation efforts in Sacramento, specifically when it comes to a banking system for these businesses.
Recreational and medical marijuana sales are still illegal under federal law, meaning banks can't legally provide their usual services to handle cannabis cash.
Businesses like Southwest Patient Group have to pay rent, utilities, suppliers, taxes, with cash. And it’s a great deal of cash. Statewide, the cannabis economy is expected to be an $8 to 10-billion dollars a year industry. With no banks, these stacks of cash create a high-security risk.
To have a better understanding of the risk that comes with marijuana retail business, NBC7 Investigates requested from San Diego Police records of calls for assistance from all marijuana dispensary locations in the city.
Since 2016 those records show San Diego Police responded to 54 burglaries, 16 armed robberies, and 10 batteries at those specific addresses.
“These are businesses with cash they've got to have security services and they've got armed guards with guns,” says Senator Robert Hertzberg from Van Nuys (D-Senate 18).
That’s one of the reasons Hertzberg introduced a bill which would create special banks in California.
The federal government would not be involved, Hertzberg said, instead, the California Department of Business Oversight would oversee the new system.
“Keeping the fewest moving parts and as simple as possible because we believe in a matter of years the federal government will change its course and ultimately regular banks will be able to bank this cash,” Hertzberg told NBC7 Investigates.
Hertzberg says bank vaults across the state are already vacant and could be used. NBC7 Investigates found in California, 918 bank branches closed since 2014 and in San Diego County 75 closed bank locations have vaults that could be used for storing cannabis cash.
“So we're trying to create this bridge as fast as possible to get this money off the street and into a safe place and banks,” Hertzberg said.
Araiza of Southwest told us he supports the idea of the new banks as a good solution.
“At the end of the day, we want to have a secure, safe environment for not just our employees but for our customers as well,” Araiza said.
Hertzberg's law to create this banking system has received statewide bipartisan support but those feelings aren’t felt in Washington, though. Measures to provide federal protections for banks who deal with legal cannabis businesses have failed multiple times.