Photograph by Morgan Rachel Levy for Bloomberg Businessweek

A Colorado Pot Dispensary's All-Cash Business

  1. Good Meds Network
    1

    Good Meds Network

    Co-owner
    Kristi Kelly

    Location
    Denver area

    Retail operations
    Two medical dispensaries

    Grow operations
    30,000 square feet

    Founded
    2009

    Employees
    Almost 50

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  2. Good Old Days
    2

    Good Old Days

    Kristi Kelly didn’t realize how good she had it. For two years after opening a medical marijuana dispensary in 2009, she was able to bank like any small business owner—accepting credit cards, depositing cash, and writing checks. In 2011 the U.S. Department of Justice issued a memo reiterating that federal law prohibits helping businesses that sell marijuana, even if they are legal under state law. That made banks nervous, and one by one they closed Kelly’s accounts. While Colorado has legalized the sale of marijuana for recreational use, Kelly is still trapped in an all-cash economy, forced to develop elaborate systems to operate efficiently yet safely.

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  3. The Cash Burrito
    3

    The Cash Burrito

    At the end of every day, two employees in each store count the cash in the registers, and both sign a form certifying that the money matches the receipts printed out. They organize the cash by denomination and wrap the stack with the paperwork, turning it into what Kelly calls “the cash burrito.”

    Other dispensary owners taught Kelly the importance of knowing who touches the cash at every step.

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  4. The Bank of Kristi
    4

    The Bank of Kristi

    She unwraps the burrito, counts the money, and enters the total in a paper ledger and the accounting software QuickBooks, checking that the total matches her daily sales minus expenses. If the numbers don’t add up, it can take her hours to figure out whether money is missing or there was a calculation error.

    “Each employee must physically be present to be compensated and count their compensation in front of an officer or manager,” Kelly says.

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  5. Money on the Move
    5

    Money on the Move

    Kelly never keeps too much cash in one place. Different employees shuttle money between locations using about a dozen nondescript bags. They try to vary the schedule every day.

    She keeps cash to cover operating expenses separate from her “savings account” for big expenses, such as the expansion of her growing facility, under way now.

    “You spend it down as fast as you can,” Kelly says. “Sometimes I pay up to three months of utility bills at once.”

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  6. Separate Safes
    6

    Separate Safes

    Kelly locks up her cash and marijuana inventory separately. Few employees have access to the cash safes because cash is a more attractive target for thieves. Some of Kelly’s clients are businesses that store pot and bills together. She sprays their payments with air freshener to lose the smell. “It’s just so unprofessional,” she says.

    “I mean, what other company keeps a stash of Febreze?”

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  7. Security Details
    7

    Security Details

    Kelly, who has been robbed once, has spent more than $100,000 on security systems, which include hidden panic buttons and dozens of cameras with feeds recorded on locked DVRs. Some dispensary owners keep a gun, which is legal in Colorado. Others hire security guards.

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  8. Dog Deterrent
    8

    Dog Deterrent

    Kelly rarely goes anywhere without her dogs Stringer Belle (below), named for the drug kingpin in The Wire, and Cecilia. She keeps them off leash to discourage attackers.

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  9. The Pain of Payments
    9

    The Pain of Payments

    Some of Kelly’s vendors accept cash, which means meeting in person so each party can count the bills and sign a receipt. For ones that won’t, Kelly sends employees with cash and payment instructions to local stores to buy money orders. She photocopies each money order before paying a bill.

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  10. Eye on High
    10

    Eye on High

    Kelly’s security systems include dozens of cameras with feeds recorded on locked DVRs.

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  11. Cash for Kush
    11

    Cash for Kush

    An ATM for customers who need cash to pay.

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek
  12. Banks Still Balk
    12

    Banks Still Balk

    On Feb. 14, the U.S. Department of the Treasury gave banks tacit approval to accept marijuana clients as long as the banks closely monitor the businesses to ensure they’re following state law. That afternoon, Kelly called six banks, and each responded: Not yet.

    Photograph by Morgan Rachel Levy for Bloomberg Businessweek