The price of running a business in cash

by Eric Kaufman, Chief Revenue Officer of Dama Financial

Contrary to popular belief, legal cannabis operators have access to FDIC-insured banking services, including checking accounts, interest-bearing accounts, armored car cash withdrawals, and reasonably priced installment loans. . FinCEN itself has provided advice on how to store cannabis, and the Department of Justice (through the Cole Memo Priorities) has specifically said that prosecuting legal cannabis operators by the state is not a priority.

Despite access to financial services, however, many cannabis companies have yet to engage with the traditional banking system. Some owners are misinformed about their options, while others choose to continue to operate entirely in cash, often citing the associated bank charges as a deterrent.

It is true that running a cash-only business does not come with an official price tag, but it does come with two significant costs.

Public security

The higher price of operating in cash is the security threat it poses. Having tens of thousands of dollars (or more!) On hand puts not only innocent employees and customers at risk of crime, but the surrounding community as well. Too much money lying around also prompts less scrupulous employees to steal, which unfortunately accounts for around 90% of thefts.

Withdraw the money and you remove both the danger and the temptation.


Many cannabis companies spend hours counting currencies each day, sometimes paying two or three employees to count them twice to ensure the count is accurate. That’s a lot of time that could be spent on more productive activities. Operators who sell cash only are also roaming the city, swallowing prepaid debit cards in small amounts to pay utility bills and cover basic office expenses electronically. (Try buying a single prepaid debit card for $ 10,000 and see what happens.) Some people literally spend an entire day, several times a month, driving from convenience store to convenience store looking for prepaid debit cards. No more wasted hours.

Operators using cash only must also pay their employees in cash. This means preparing not one but two stacks of invoices for each employee: one for wages and one for payroll taxes, each payday. Companies must then provide employees with the documentation surrounding these payroll taxes, which can easily turn into an accounting nightmare riddled with inaccuracies.

Then there’s the problem of the businesses themselves having to pay taxes, which usually involves carrying gym bags full of bills to a town hall which is often miles or even dozens of miles away. kilometers. This is followed by a queue to hand over the money before return.

When a cash-only cannabis operator wants to grow, how is he going to raise funds if investors have no way to send them to them other than to drop a briefcase? And will investors get their investments back in an equally inconvenient way? Too much headache for investors usually means … no investors.

The big picture

If time is money, cash-only cannabis operators spend a lot of it. They also inadvertently put the safety of their communities at risk. Transparent engagement with the banking system solves both problems by dramatically improving operational inefficiency and public safety.

Operating with cash may be free, but that doesn’t mean it’s cheap.

About Financière Dama

Dama Financial is the nation’s largest cannabis banking and payment solutions provider and works directly with banks to develop and maintain their cannabis programs while following Cole Memo guidelines as well as FinCEN and BSA / AML rules, while staying up to date with state and federal regulations.

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