The Drug Enforcement Administration is being accused of frightening armored car services out of doing business with medical marijuana dispensaries, making it even more difficult for state-licensed facilities to process payments.
Many medical marijuana dispensaries deal primarily in cash because credit card companies decline to process payments, as a result of an opaque government edict last year.
"It will create a very dangerous situation," Harborside Health Center attorney Henry Wykowski told U.S. News.
Harborside is one of the largest dispensaries in California and currently generates around $28 million in annual sales. Ninety-five percent of transactions are done in cash, Wykowski said.
The dispensary, which has two Bay Area locations, was informed by Dunbar Armored last week that the security company was ending their business relationship. Wykowski says the company cited pressure from the DEA.
Dunbar is the last in a series of armored car companies to drop Harborside as a client, Wykowski said. "Basically they were the provider of last resort" after other providers discontinued service last year, he said.
The DEA has not yet issued an on-the-record reaction to the allegations.
Sean Gibbons, Dunbar's vice president of corporate communications, told U.S. News he had no comment on the issue.
The companies that previously discontinued service with Harborside were told by the DEA "if they continued to do this they would have problems," the Harborside attorney said. He's unaware of the precise language used.
"My understanding is that it was an overall, broad directive," Wykowski said. He represents more than 60 dispensaries and said other clients in northern California lost service. Colorado clinics, too, reported similar issues, Wykowski said.
Kris Hermes, a spokesman for the medical marijuana advocacy group Americans for Safe Access, told U.S. News the DEA is "almost inciting people to rob [the dispensaries] and increasing the security issue for law enforcement."
Wykowski agreed, saying the Oakland- and San Jose-based business could become "a target for armed robberies." The lack of secure payment-processing also makes paying state and federal taxes more difficult for Harborside. "We don't have a plan yet and even if we had a plan, I don't know if I would discuss it for safety reasons," the attorney said.
"With the election of President Barack Obama, frankly, we've seen this crackdown [on medical marijuana]," Hermes said. "Dispensary operators were more than willing to be above-board... it's mostly the crackdown that has forced operators and patients to deal in cash only."
There are currently around 1,000 medical marijuana dispensaries in California and another 1,000 across the country, Hermes estimated. Twenty states and Washington, D.C., allow sick patients to use the drug with a prescription. The number of providers is in flux, Hermes said, because as many as 600 dispensaries shut down in California since Obama took office.
The Obama administration opened with an apparent fulfillment of the president's campaign promise to respect state medical marijuana laws. The 2009 Ogden memo proclaimed it wasn't a good use of Justice Department resources to target dispensaries or patients, unless more serious crimes were being committed. Two years later the Justice Department's Cole memo rolled back that promise, citing dispensaries with "revenue projections of millions of dollars."
The Justice Department still hasn't said what it will do when state-licensed recreational marijuana stores open next year in Colorado and Washington state.