Law Firm of Lindsey Daugherty | Denver, CO 80210 | (970) 290 - 8465 | Douglas, WY 82633 | (307) 359 - 3607

Law Firm of Lindsey Daugherty | Denver, Colorado Attorney

ATMs in or near pot shops called "disaster waiting to happen"

By David Migoya

The Denver Post

Restrictive federal banking regulations that have forced most legal marijuana dispensaries to run as cash-only businesses have opened the door to another enterprise — automated teller machines — that seems to be a natural fit.

But the mixture of a booming recreational marijuana trade with easily acquired ATMs has some wondering whether it's likely to yield more trouble than good.

The overriding worry is that the legal-marijuana industry could quickly become the innocent vehicle for criminal enterprises looking to launder cash through ATMs serving the fledgling, cash-reliant business.

Exacerbating the issue: There are thousands of privately owned ATMs across Colorado, but no one place — not law enforcement, not state or federal banking regulators, not even the ATM networks themselves — knows who owns them all or, for that matter, where they are located.

ATMs owned by banks are regulated by federal banking laws. Privately held ones are regulated by states that choose to do so — and Colorado isn't one of those that does.

That makes law enforcement and regulators even more nervous.

"That's not only a disaster waiting to happen; it's a disaster that will happen," said Jeff Sweetin, a retired former agent in charge of the U.S. Drug Enforcement Administration in Colorado. "It's almost an ideal way for the criminal element to operate. Any time you have an easy ability to move large amounts of cash into the system without checks and balances ... you're wide open."

State and federal officials in law enforcement and banking will not openly discuss issues involving banks and legal marijuana sales — and that includes ATMs. That's because marijuana remains illegal under federal law, as are the businesses that deal in it.

"Could ATMs be used to launder money? Conceivably, yes," said Carolyn Tyler, spokeswoman for Colorado Attorney General John Suthers. "But this is a public-policy matter for the legislature. It speaks to the overall need for the banking issues to be remedied at higher federal levels, and our state has been calling for that."

Because federal law prohibits banks from knowingly working with marijuana — and all ATM networks require a host bank to connect into the system — some banks have already told ATM providers that bank with them not to place the machines in dispensaries or shops.

But they are there anyway — sometimes inside the dispensaries, sometimes right next door.

"The one concern sometimes voiced about ATMs, and it is not a new issue, is in regard to money laundering," said Bruce Renard, executive director of the National ATM Council, an industry trade group for ATM deployers. "The question is whether legalization of marijuana in Colorado makes it a bigger issue there for potential misuse and abuse of ATMs with cash. I don't believe it does, but it presents an interesting public-policy debate."

Read more: ATMs in or near pot shops called "disaster waiting to happen" - The Denver Post 

Background Photo Credit: Kasia Broussalian © 2015