Legal cannabis sales are experiencing a bull market, but retailers are forced to walk home with duffel bags filled with cash.

According to a report by Arcview Market Research, experts expect national legal sales of marijuana to top $7 billion in 2016 and to surpass $22 billion by 2020.

However, so-called “ganjapreneurs” who sell marijuana legally have bigger worries on their minds: Where to put the money they’ve made.

Legal marijuana retailers are stuck in a bit of legal limbo. Although the sale of marijuana is legal in some states, federal guidelines still define marijuana as a controlled substance. Because of this, banks are hesitant to take the earnings of marijuana dispensaries into their vaults.

the dead end of banking marijuana businesses

Photo credit: Tadson via VisualHunt / CC BY-ND

Legal challenges of handling pot payments

In a nutshell, due to the differences in state and federal regulations of the U.S. banking system, a bank located in a state that accepts money from a marijuana sale would be in violation of federal laws regarding the sale of a controlled substance, which is technically considered money laundering. In turn, this violation could result in the loss of the bank’s FDIC status. So, it makes sense that many financial institutions have steered clear of banking marijuana businesses. Of the few banks that do accept money from the legal sale of marijuana, entrepreneurs have encountered enormous fees, mountains of forms, and notifications that their accounts would be closed with just a 2 week notification window.

Stuck in a difficult situation, entrepreneurs resort to doing business the old fashioned way: they use cash. Retailers have had to hire private security teams, refurbish old armor cars, and even develop systems to ensure employees are not robbed when they leave at the end of the week with their cash paychecks.

Trying to fix the problem

There aren’t many solutions to the problem of finding a home for “state-clean-but-federally-dirty” money.

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