Christian Hageseth, founder of Green Man Cannabis, and author of the book Big Weed, joins Joe and OG down in the basement to give insight into the struggles of the all cash legal marijuana world.
Joe: Back in the old days, marijuana and mom’s basement used to go hand in hand. But that’s not the case anymore is it?
Chris: Well I think it still is for a lot of folks. But it’s changing here in Colorado, Washington, and a few other states.
Joe: I love the way that Big Weed starts. The intro says you had $40K in your backpack! I can’t imagine the sweat I’d have running down my brow if I had $40K (stuffed) in my backpack.
Chris: Right! (laughs) If you’ve got a few hundred….if you cashed your paycheck and took it in cash you’re nervous. $40K in cash…..and it was all twenties. So here’s what that ends up looking like: If you took a manila envelope and filled it with a single stack of bound $20’s….. and put eight stacks in there. You’d need two of those. So these two manila envelopes each have about $20K in them and it’s unbelievable that you have some manila envelopes (almost literally) in your back pocket. Who doesn’t? (laughs) Anybody (around me) who had any idea what it was and it would have been gone.
Joe: Do you mind telling the story where you were headed?
Chris:  I was building (our new operation called) The Weedery and wanted to hire an architect to help me design it. I had to pay him. Initially what we had agreed on is that I would pay him by check. He cleared it with his attorney that it was okay to do the work, but I couldn’t pay him in cash because it could be suspected to be drug money, and there would be problems depositing it. I tried to pay him a couple of times, and I couldn’t get a check fast enough which in a sense is just laundering the money (anyway). I’ve got to clear that money, get it into my bank, and write a check for some real purpose. It’s a pain…..man; it takes some real time.
So one day I realized my bill was getting really high, so I had a meeting with him. I Just grabbed $40K in cash and took it with me thinking I want to get this guy paid. I walked in and pulled the 40K out of my backpack and said, “here ya go.”
He looks at me like…like…he’s sitting across his desk and he does this thing where he looks at the (money), and he just rolls back in his chair. His shoulders shrug, and he looks at me and goes, “really man? That’s cash isn’t it.”
I’m like, “Yeah, it is but I can’t get you a check right now.”
He says, “ah” and puts his hands on his brow and says, “I don’t think I can do this.”
I put the money back in my backpack, and that was it. It took us another 45 days to clear the money through our systems and write him a check.
Joe: On the money end of it, Chris, that first year in medical marijuana you said you grossed $300K. Your first year when it was legal recreationally, and you were not focusing on the recreational side of it yet, you sold 4 million dollars (worth). With your Weedery, you expect to do $97 mil. This is a business that is growing incredibly quickly, yet….banking, how hard it is to do banking?
Chris: The problem with banking in Colorado is that, marijuana, although legal… and licensed by the State of Colorado, is a very regulated industry. It is still federally illegal. All banks and credit unions have either FDIC or NCUA insurance that insures the deposits of all the depositors. That insurance has this pesky little clause in it that says the banks must follow all state and federal laws…and the cultivation and sale of a controlled substance violates the Controlled Substances Act and is a clear violation of federal law.
Banks are very clear on this, “We can not touch the money that is derived from the sale of a controlled substance”…. They violate the clauses of their insurance if they accept our money. We’re in an all-cash business… We can’t take checks because we have no place to cash them, we can’t accept credit cards because we have no place to clear those transactions… Our customers come in, pay us in cash, and then we have to take the cash off-site and count it.
For any of you that have kept hundreds of thousands of dollars in cash in a vault, you know you have to stack it by denominations. And so after you get the day’s sales out then you have to break it out and stack it…you know, in hundreds, fifties, twenties, tens, fives, ones and all different denominations of coin. And you have to know how much of each denomination is in the safe at any given moment. That is how you do vault accounting.
If you want to know anymore on how Chris handles paying his employees, where the marijuana taxes go to in Colorado, how he was able to open his own pot business, or if it is the right time to invest in marijuana stocks, please listen to our interview with Chris on the Stacking Benjamins Podcast. You can check out Chris’ book Big Weed here.
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