Up in smoke: How marijuana shops in Colorado are protecting themselves from losses

Stuck dealing exclusively in cash, retail marijuana shops have to implement extensive security measures to avoid being easy prey

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"The rule is 20 days of onsite storage, and then 20 days in a backup server offsite," says Fox. "And even where the DVRs are, there has to be a separate camera that's watching that area that's not linked to that DVR, so there's just lots of checks and balances as far as video surveillance goes."

No amount of rules and minimum regulations can protect against insider threats, however, which are a very real concern for stores like Fox's. The first step to fight them comes in the form of background checks, which are also handled by the MED. This includes criminal and financial background checks, checks on unpaid child support, and even determining whether or not potential employees are delinquent on student loans.

"[Employees] have to be badged and fingerprinted through the Marijuana Enforcement Division to work in this industry, and they do extensive background checks," says Fox. "So if there's any issue on any level, there's no way they can get in. It doesn't get much more thorough than the Marijuana Enforcement Division."

But 3D takes it upon itself to implement its own measures to prevent any incidents involving its own employees. Aside from having employees agree to take lie detector tests upon request during their hiring process, the company also implements staunch inventory control that is performed three times a day, which ensures that a red flag is raised if something is fishy.

"We have a lot of checks and balances on inventory control," says Fox. "So sometimes something comes up, but we're on it because we have a balance here that says, 'Well wait, where did those two ounces go?' And then we have cameras that we can pull up and see what the situation is."

Employees' loyalty to the company, Fox added, goes a long way in preventing them from stealing either cash or product to sell on the side -- either or on the streets or on the Dark Web. She maintains that any black market dealing done by employees would, in theory, have to be from their grows at home; there's no way that they could steal product from her on a regular basis and she hopes that there's enough loyalty that they wouldn't even think to try.

"There's always the concern of insider threats, especially when you're dealing with cash and marijuana," Fox says. "But we just try to hire the most trustworthy people we can and compensate them so that they appreciate their job."

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In terms of establishing a safer environment, the immediate future looks somewhat bleak for shops like 3D. The Department of Justice has declined to say whether or not there is an impending solution or change to the banking rules, and outside help with protecting marijuana shops is non-existent.

There are efforts at the state level to ameliorate the issue, but no solutions have materialized yet. A House bill was introduced last Wednesday that, if passed, would offer shops access to a state-backed (uninsured) financial co-op, thereby giving them access to checking and merchant services. On Thursday, however, Colorado Representative Kevin Priola sponsored an amendment to the bill to study the matter further, thus delaying any potential solution.

"Sometimes legislation has unintended consequences when it gets rushed through at the last minute," says Priola, who adds that session ends on May 7. "I was just nervous about doing something hastily. Over the next 7 to 8 months, we'll make sure the legislation was the route to go or what tweaks we need to make."

Priola recognizes that there's an issue at hand, but he also points out that whatever ends up being done -- including the potential financial co-op idea -- the feds would need to sign off on it.

"It needs to be thoroughly thought through and vetted because it will set national precedent," he says. "I understand how much of an issue it is for people in the industry to have to deal with all this cash."

But when asked if he believes that marijuana shops should have access to banking, Priola does not offer his opinion, instead putting the onus on the federal government.

"I believe that's a question that the federal government needs to make clear for states in general," he says. "Because this is shaping up to be a state versus federal issue. And we need to make sure we honor the law, regardless of where it is."

The police, in the meantime, are not directing resources towards protecting stores. Aside from their arrival in the event of a tripped alarm or a phone call -- which is the case with any retail shop -- the Denver Police Department does not coordinate with or offer any additional assistance to marijuana dispensaries. Though the DPD was contacted for comment, a spokesperson for the department deferred to the mayor's office, saying that it was the "proper channel" to go through for comment.

The mayor's office, in turn, did not respond to repeated requests for comment. When I mention this to her, Fox says she isn't terribly surprised.

"[Denver Mayor Michael Hancock] has been nothing but a complete, difficult pain in the a__ for us," she says. "So he's not going to give you any feedback."

Needless to say, Fox isn't especially optimistic about local government making any pushes to address the banking issues that marijuana shops face.

"Hancock doesn't like us, he thinks we're trash," says Fox. "He thinks we're drug pushers and that marijuana is a gateway drug. He's a knucklehead, and you can quote me on that."

Copyright © 2014 IDG Communications, Inc.

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