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

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

A Colorado Pot Dispensary's All-Cash Business

Good Meds Network
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
Good Old Days
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
The Cash Burrito
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
The Bank of Kristi
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
Money on the Move
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
Separate Safes
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
Security Details
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
Dog Deterrent
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
The Pain of Payments
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
Eye on High
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
Cash for Kush
Cash for Kush

An ATM for customers who need cash to pay.

Photograph by Morgan Rachel Levy for Bloomberg Businessweek
Banks Still Balk
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