When Perry Brink started transporting parcels on his horse-drawn wagon in 1859, surely he could not have imagined that 160 years later his family endeavor, now a multinational cash management company, would be delivering cannabis shipments — a task that was once the province of smugglers and criminal gangs.
But, times have changed.
Canopy Growth announced on Nov. 8, 2018, that it had entered into a multiyear agreement with The Brink's Company through its Brink's Canada subsidiary.
The special requirements of the cannabis industry have given rise to a new kind of security firm that understands the distinct laws, regulations, risks, and precautions necessary to operate legally outside of the federal banking system.
The U.S. Drug Enforcement Administration classifies cannabis as a Schedule I drug, which means it has no medical value and possession is considered a criminal offense. As a result, the marijuana industry's access to banking and financial services has forced a potentially billion-dollar industry to linger in a vulnerable, cash-only limbo.
“Transporting is the riskiest time of the whole process. It's nerve-wracking to be carrying lots of cash, which is untraceable, but [cannabis] concentrates can be worth even more than cash,” said Terry Blevins, founder and CEO of Armaplex, a cannabis security company based in Culver City, California.
Blevins, a former head of security for Apple in California, explained that dispensary owners are at a disadvantage because California state law requires that all cannabis products be moved by a licensed transportation company. Without a security license, dispensary owners cannot get insurance to cover the risks associated with transporting their own cash and products.
“But people do it anyway and it's dangerous … not everyone wants to pay for our services so they take their chances,” Blevins told Weedmaps News.
In addition to delivering cannabis products in their unmarked, armored vehicles, Armaplex picks up cash from dispensaries and transports it to U.S. Private Vaults, a privately owned safe-deposit box firm in a Beverly Hills, California, strip mall. Before entering the 50-ton structural-steel-reinforced concrete vault, clients are identified through biometric scanners; no names, no IDs, no Social Security numbers are necessary.
“Clients can be in and out within five minutes and they're the only ones in the world with keys to their boxes,” CEO and founder Mark Paul told Weedmaps News.
Hardcar Security of Palm Springs, California, co-founded in 2016 by Jeff Breier and Todd Kleperis, exclusively hires combat veterans to drive their unmarked, armor-plated vans.
"We move our clients' cash and thousands of pounds of sun-grown, full-spectrum cannabis flower" grown by their partner, the Northern California Humboldt Brand, said Breier, Hardcar's chief operations officer who spent 17 years providing corporate security in Latin America.
“We're the Brink's of the cannabis industry,” Breier told Weedmaps News. “We bring our customers' cash to the Federal Reserve and four different banks.”
Small banks, credit unions, and insurance companies providing services to the cannabis industry are not keen on having their names revealed, Breier added.
Even in a legal marijuana state like California, the abundance of regulations and the nagging threat of a federal crackdown make cannabis transportation risky.
Tax time can be especially dodgy for those who lug bags of cash to the IRS office.
To avoid a hardship on tax-paying citizens, California expanded the allowable methods of payment to include paper money, but only by appointment made 21 days in advance and only at only at designated offices, according to a set of instructions provided to Weedmaps News by Casey Wells of the Department of Tax and Fee Administration's Office (CDTFA).
Things apparently got chaotic in the past, according to The Guardian, which described cannabis retailers bringing so much cash into a Sacramento tax office that the drawers overflowed and money stacked on desks filled the air with a pungent scent emanating from piles of cannabis-smudged bills.
This year's tax season will be much calmer, Wells said. Cash must be sorted by denomination with all bills facing the same direction, not be “mutilated, contaminated, worn, or counterfeit” then placed, not overstuffed, in a clear 9-by-12 inch bank-deposit-type plastic bag, which must be sealed before entering the lobby of the tax office.
Taxpayers must insert a voucher in each bag stating how much cash it contains. The money, however, is not counted on the spot. If a discrepancy arises later between the tax board and the client, the latter can file a dispute.
Have any disputes been filed?
“No, the CDTFA has not had disputes over the cash amount verification,” said Wells.
“It's still early,” Wells said. “The process was only introduced in January 2018.”