Where would you put your money if you weren’t allowed access to a bank? In a safe? Under the mattress? Maybe a friend can hold onto it for you? Now, let’s say you’re operating a successful business and the money is flowing in at a generous rate. Putting cash like that in a safe, under a mattress or with a friend might make you feel a little uneasy. This is the problem marijuana dispensaries country-wide face on a daily basis. Laws on what usages of marijuana is legal or illegal may vary state by state, but under the eye of federal law, it should be avoided at all costs.

The Department of the Treasury Financial Crimes Enforcement Network laid out the expectations for banks regarding marijuana-related businesses. The Controlled Substance Act (CSA), “makes it illegal under federal law to manufacture, distribute, or dispense marijuana,” according to the memo. Banks are insured under federal law, so if they decide to do business with a dispensary, then they risk losing their insurance.

Don’t ask, don’t tell?

Under the Obama administration, Attorney General Eric Holder told financial institutions that they wouldn’t be investigated if they worked with marijuana-related businesses inside of states where it was legal and the businesses were acting according to state law. However, it wasn’t reassuring for banks, because there was nothing stopping the government from investigating them regardless. Today’s administration is likely to take a different approach. Current Attorney General Jeff Sessions is blatantly opposed to the idea of legalizing marijuana and any progress toward the industry being able to work with banks can be temporarily stunted.

“Is there a way to do this without legislation?” asks Paul Hickman, president and CEO of the Arizona Bankers Association. “Frankly, there isn’t. I can’t tell you why. I can just tell you the Arizona Bankers Association looked at it. Marijuana has to get rescheduled legislatively. Congress has to direct the Drug Enforcement Agency (DEA) to reschedule it under the Controlled Substances Act.”

There are some banks that choose to take a gamble and work with the industry. They benefit just as much as the business would. They’re able to profit from them and charge interest rates just like they are able to with any other business. There are certain ways that banks have found to get around it. Banks will help a business by dealing with them indirectly. They’ll handle transactions with everything surrounding the institution — like providing a loan for improvements to the grow facility — but they won’t touch the money that comes from sales or get their hands in payroll for employees.

A growing risk

“The problem is if you work with dispensaries, you’re risking your insurance,” Hickman says. “It doesn’t matter if you’re a state charter or a federal charter. You only have one insurance carrier if you’re a bank and that’s the FDIC (Federal Deposit Insurance Corporation). If you don’t have insurance, you’re out of business.”

What options do marijuana businesses have then? Besides trying to build a relationship with a local bank, they typically store their cash in a safe away from the site of the actual business. They have ATMs installed in their store for easier cash transactions. In an exaggerated sense, yes, they’re basically hiding their money under the mattress.

“You can’t have a business this cash-intensive not have access to a bank,” Hickman says. “Sooner or later, someone will get hurt.”

Prop 203, or the Arizona Medical Marijuana Act, passed by a slim margin in 2010. It went into effect in the spring of 2011 and Arizona became the 14th state to adopt such a law. The cannabis industry is overseen by the Arizona Department of Health Services (ADHS). The state has yet to hop on the recreational train, but it’s likely that’s where things are heading after Prop 205 was narrowly rejected in 2016.

A budding business

It’s not the state’s laws that makes it stand out, but the regulations. Arizona is a highly-regulated state when it comes to the distribution of marijuana, which is no small feat when taken into account how quickly the industry has grown. Between 2011 and August of this year, the number of active medical marijuana cardholders more than quadrupled, from 35,641 to 144,947, according to ADHS.

“We’re a very successful industry,” says Laura Bianchi, director of Rose Law Group’s Cannabis Practice. “We’ve done very well in Arizona. The number of patients have continued to grow each year and we have a lot of quality dispensaries. We have a vertically integrated license here, so you can dispense and cultivate.”

At the rate it’s going now, the likelihood of recreational marijuana usage becoming legal in Arizona in the near future is high. What will keep Arizona ahead of the game is maintaining these strict regulations. States like Colorado and California have been watching how the industry operates here. Arizona has a limit to the number of licenses given out and the zoning and land use are also more restrictive in the state, whereas unregulated states may have hundreds of dispensaries in one city alone.

“I know that because it takes time and money and effort to actually get a license and maintain a license and operate successfully, it starts to kind of, for lack of a better phrase, weed out the people who maybe wouldn’t make the greatest industry leaders,” Bianchi said.

Working together

While it has been a factor in accidental deaths, marijuana has not reportedly killed someone through overdose, yet it’s still categorized by the Controlled Substances Act as a Schedule 1 drug, next to ecstasy, LSD and heroin. There were 20,101 overdose deaths related to prescription pain relievers in 2015, according to the American Society of Addiction Medicine. With that kind of label, it’s understood why banks don’t want to get their hands “dirty,” in a sense. However, it’s making legal marijuana business operators feel like criminals that need to sneak around.

“They pay federal taxes,” Bianchi said. “They just don’t have the opportunity to bank like everyone else does. It’s a constant battle. It’s politics, though. It’s a slow-moving train. We do the best we can.”

The state has come a long way since first legalizing the medical use of marijuana in 2010. However, the states can only do so much before it has to be left up to the federal government. People within the industry continue to lobby their politicians on every government level. The level of sophistication from within the business — from growing the plant to the paperwork that’s necessary to be a cardholder — has raised eyebrows. More professionals have begun to join the industry. It’s a system from which everyone can benefit.

“We continue to mature as an industry,” Bianchi said. “It’s here. It’s in 29 states. It’s not going anywhere.”