Kristi Kelly owns Good Meds, a medical marijuana company. Banks face prosecution for working with marijuana dispensaries, forcing businesses like Kelly's to operate almost entirely on cash.
The Fourth Corner Credit Union occupies a prime spot in downtown Denver, not far from the state Capitol. It has a big safe, four teller windows, drive-up service and a banner out front that says, "The Fourth Corner Credit Union Coming Soon."
But there's a problem.
The Federal Reserve Bank of Kansas City, which oversees Denver, has refused Fourth Corner's request for a "master account," essentially a bank account allowing it to do business.
"You can't have a bank chartered by the state of Colorado and then nullified by the federal government," said Mark Mason, an attorney for the credit union.
Unless the Fed simply doesn't like the customers.
And in this case, the customers work in the cannabis trade. Fourth Corner hopes to be the first financial institution in the nation catering exclusively to the marijuana business.
But although pot is legal here, it remains a Schedule 1 controlled substance along with LSD and heroin in the eyes of the federal government. That means any bank working with the weed business faces prosecution.
"Banks face a number of risks if they choose to serve the industry, up to and including closure of their institutions," said Amanda Averch, director of communications for the Colorado Bankers Assn. "Regulators can impose civil money penalties, cease-and-desist orders, fines and can ban bankers from their careers for life."
Political remedies are being considered but major roadblocks remain, leaving the $700-million-a-year cannabis industry running almost entirely on cash. Bags of it are taken to grocery stores to buy money orders to pay staff. Houses are rented and filled with safes full of cash. Phony bank accounts are created and then shut down when the money arrives reeking of pot.
Nearly everyone in the marijuana business has had bank accounts closed.
"So far we have lost 25 bank accounts," said Kristi Kelly, owner of the Good Meds medical marijuana dispensaries near Denver. "Our biggest area of exposure is what we do with our cash. Then how do we pay our bills? We are not talking about $20 but five- and six-figure bills."
Those who can have hired armed private security to guard the product and ferry cash around Colorado in armored vans.
Our biggest area of exposure is what we do with our cash. Then how do we pay our bills? We are not talking about $20 but five- and six-figure bills. - Kristi Kelly, Good Meds medical marijuana dispensaries owner
The guards are often former military personnel with combat experience in Iraq and Afghanistan.
On a recent morning, Tom Morton, a towering former Marine, cruised through a warren of faceless warehouses in North Denver before pulling into a side alley, walking up a few steps and ringing a bell.
The doors opened, revealing a bright, cavernous room with dozens of workers busily tending marijuana plants as tall as summer corn. An alcove flickered with 48 cameras trained on every employee.
Morton, 27, is a supervisor with the security company Helix TCS, checking on Travis Dombrowski, 26, a guard who carries a semiautomatic pistol on his hip.
"I feel comfortable that I can defend the people here from any threat that comes through that door," Dombrowski said.
"Travis and I served together in Afghanistan. I know I can trust him with my life," he said.
"I know in a gunfight he won't back down."
The day before, Morton was driving $20,000 in cash and 50 pounds of pot around Denver in a van, a guard toting an AR-15 assault rifle perched in the back.
"It's totally legal," he said. "But it feels sketchy."
Criminals have targeted dozens of pot businesses. Earlier this year, shots were fired during two robberies. In another incident, a man crashed a pick-up through a grow house and chopped down $15,000 worth of plants. And then there was a gang preying on couriers moving cash around the city.
No one has been killed, but many believe it's just a matter of time. And that's what got 26-year-old Alex Mason thinking.
He had a lot of friends in the marijuana industry and was appalled at the obstacles they faced conducting a legitimate business. So he and his father, Mark Mason, came up with the idea of a credit union servicing the cannabis business. They assembled a staff, a chief executive and a board of directors, and last year they received a state charter.
"Forget whether you are for or against cannabis, there is no rational argument to keep it an all-cash economy," said credit union Executive Vice President Mark Goldfogel. "There is no scenario where black marketing cash from a legal business is sustainable."
According to Mark Mason, the situation pushes the cannabis industry to the margins of legality.
"Most have figured out a workaround to get money to the state and others through friends or under management companies," he said. "But it all comes very close to the textbook definition of money laundering."
Mason has filed suit against the Federal Reserve for denying the credit union a master account and a hearing is set for Dec. 28 in federal court here.
A Fed spokesman declined comment.
Last year, the Obama administration issued new guidelines for banks wishing to do business with marijuana dealers that lessened the threat of prosecution but didn't offer immunity from it.
According to the Colorado Bankers Assn., 12 small banks are now working with the cannabis industry on a limited basis, but they have been warned by federal regulators not to expand those accounts, which are being closely monitored.
Blue Line Protection Group, a security firm, is doing compliance checks for such banks to ensure their cannabis clients are obeying the law.
"We know the dispensary owners, what questions to ask and how much cash and product they produce," said Blue Line Vice President Michael Jerome. "We do on-site compliance for the banks and they provide accounts for the businesses."
Blue Line is also opening a 12,000-square foot fortified "vaulting and cash processing facility" to safeguard their clients' money.
Kelly, the dispensary owner, recently opened an account with a bank that asked not to be identified. She knows it could be shut at any time.
"When my first account was closed I felt indignant," she said, "like I was being discriminated against.
"It reminded Kelly of her grandmother, who had moved from China to Washington and stuffed her mattress with money because no one would give her a bank account.
"So these Chinese immigrants got together and opened their own credit union," she said. "I think there are some interesting parallels here. History has shown we can get through this, that we can remedy historical inequities."
The best solution may be an act of Congress.
Lawmakers including Colorado Sens. Michael Bennet, a Democrat, and Cory Gardner, a Republican, have introduced legislation giving marijuana businesses access to banking while barring regulators from punishing banks who legally work with them.
It's supported by the Colorado banking industry and Gov. John Hickenlooper, a Democrat who opposed marijuana legalization.
But until something changes, dispensary owners and growers will continue to play hide-and-seek with criminals and rely on outfits such as Helix to protect their crops and cash.
In Greenwood Village, just south of Denver, Zachary Venegas monitored the movement of his security guards across the region from his office. If one of their unmarked vans carrying cash or marijuana veers off course, he's instantly alerted.
Venegas is a West Point graduate and former infantry officer who has owned security businesses in Africa and the Middle East before becoming chief executive of Helix. Nearly all his employees are former members of the military.
"We are all comfortable in a mission-oriented culture," he said.
Still, he believes it's just a matter of time before a major crime targeting the cannabis industry results in significant casualties.
"A lot of people are saying, 'Well, let's just see how it goes,' as if there's not an actual threat," he said. "But I think the illegal side is out there just watching and waiting to strike."