This could be the No. 1 problem facing legal weed businesses in America
Four states and Washington, DC, have already legalized recreational marijuana, and more may be poised to join them despite the reluctance of some New England states to follow suit.
Now that more states are legalizing pot, it's starting to become a lucrative business.
Legal marijuana sales in the US spiked to $5.4 billion in 2015 - up from $4.6 billion the year before, according to CNBC, which cited data from ArcView Group, which follows the marijuana markets.
Though this is all completely legal revenue, most banks won't take cannabis cash.
That's because marijuana is illegal under US law, and banks have to comply with federal regulations. While it's possible for banks to accept pot cash without violating federal law, they have to take many additional steps to ensure they're in compliance.
Rob Rowe, the vice president of the American Bankers Association, told the Huffington Post last year that if banks do choose to process funds from marijuana companies, and something turns out wrong, the bank will risk losing its charter.
For many banks, it's not worth it. Just 220 of America's 7,600 banks and credit unions accept money from pot businesses, Bloomberg reported in October. Effectively, this means legal pot is a cash-only business.
While this is an inconvenience for consumers, who must pay for their legal highs in cash, it's a much bigger problem for private marijuana growers and distributors.
"A lot of people hear 'cash only' and think that means they can't accept credit cards," Taylor West, the director of the National Cannabis Industry Association, told ThinkProgress. "That's true, but the real complications come on the backend. You're paying your staff in cash, your utility bills, your mortgages, and your taxes. Not being able to handle these transactions electronically is just incredibly difficult."
And this difficulty hurts marijuana companies in numerous ways. First, because these companies are all-cash businesses, it makes paying taxes especially difficult for marijuana companies.
Jaime Lewis, the owner of Denver-based marijuana company Mountain Medicine, told ThinkProgress that because her business is all cash, she has to factor the threat of robbery into every business decision.
"We rotate pay schedules, and we have a buddy system where we walk employees to their cars to make sure they get there safely," Lewis said. "It's ironic that we are respected as an industry in the state, yet still treated like criminals."
On top of this, legal marijuana companies must pay an extra 10% on federal employee withholding taxes because they can't pay them electronically, according a lawsuit challenging the practice cited by the Denver Post.
Second, marijuana companies aren't eligible for the same tax deductions as other small businesses. This stifles marijuana entrepreneurship, says Jessica Rabe, a market strategist who follows the marijuana industry for investors, according ThinkProgress.
And third, it makes being in the marijuana business inherently risky. Many marijuana companies are forced to operate like casinos, CNBC notes. They must employ private security companies replete with armored cars, security cameras, and ex-military operators to safeguard piles of legally acquired cash.
There is a potential solution to these problems, though it's facing some legal challenges. The Colorado state government chartered The Fourth Corner Credit Union in November of 2014 as a dedicated bank for marijuana companies.
Even though the state of Colorado itself chartered the Fourth Corner, the Federal Reserve's branch in Kansas City rejected its application to open a master account (which is necessary for a bank to function). The Fed also rejected the Fourth Corner's application to establish an electronic payments system, which would have allowed customers to buy marijuana products with their credit cards.
The Fourth Corner brought a lawsuit to federal court seeking to force the Fed to give it access to a master account in December.
A US district judge, R. Brooke Jackson, dismissed the Fourth Corner's lawsuit in January, saying that allowing it would, "facilitate criminal activity," as marijuana is still illegal under federal law, according to The Denver Post.
"These guidance documents simply suggest that prosecutors and bank regulators might 'look the other way' if financial institutions don't mind violating the law," Jackson wrote in his nine page opinion, per The Denver Post. "A federal court cannot look the other way."
But while the federal government is blocking Fourth Corner's efforts in court, the state of Colorado is throwing its full support behind the nascent recreational marijuana industry - and its right to bank.
"I'm a pro state's rights guy, and in Colorado we have legalized," Chris Myklebust, the Colorado Commissioner of Financial Services, told the USA Today. "I've never even held a joint but I really want to see them banked."