CAITLIN WILSON 
REBOOT STAFF
JUN 18, 2015
Illinois residents now are free to apply for and receive licenses for medical marijuana prescriptions, and the state already has issued about 2,500 for patients with conditions that could be eased by use of the drug. But how can they buy their medications if the state’s limited number of licensed dispensaries can’t take their customers’ debit or credit cards and don’t have a place to provide or stash cash?
Oak Park dispensary owner Brad Zerman is working on finding a solution to this problems in Illinois, following a model he says he studied in Colorado in 2014. His company, Sky Processing, is planning to operate ATMs that can be installed in dispensaries throughout Illinois. These ATMs would be fully legal and solve many of the medical marijuana industry’s financial problems surrounding cash access, transparency and banking compliance.
“We see that we can provide a valuable service,” Zerman said of dispensaries that don’t have relationships with banks that would allow them to operate other ATMs at their stores. “All kinds of businesses have become…reliant on ATMs, now,” he said, pointing out it would be a huge knock against the ability of dispensaries to operate like normal businesses if they couldn’t provide a space for their customers to get cash.
Customers would use their cards at the ATM normally, and then Zerman’s company and a bank with which he partners (and which has agreed to be involved with the medical marijuana industry) would provide the cash.
Zerman was one of the Illinois dispensary owners who were awarded licenses by Gov. Bruce Rauner in February. He hopes to open his dispensary in Medical Marijuana District 36, in Oak Park, this year, complete with a fully functional ATM so that his customers have access to the cash they need to buy their meds. He wants other dispensary owners to know about his ATM plans so they have the option to install them in their stores, too.
The process of opening a dispensary has not been easy for Zerman, he said. When his license for District 36 was approved in February by the Rauner administration, Zerman had plans for opening his retail space in an outdoor mall in Oak Park. But the mall owners were uncomfortable hosting a medical marijuana dispensary, so Zerman had to start over. His license was still valid, but instead of having to submit updated plans due in June like every other dispensary operator in the state, he had to submit plans that reflected his efforts to find a new space that was at least 1,000 feet away from schools, allowed medical retail space, was within his assigned district and had owners who were comfortable with a marijuana dispensary on their premises. He also had to reconfigure his business and security plans to fit the new space and show those new plans to the state.
One benefit Zerman’s dispensary (now called Seven Point, after a common cannabis leaf) will have over many others is a working relationship with a bank. Zerman says he was able to negotiate an agreement with a bank (which he declined to name) that will hold his money so that he can pay utility bills, employees, rent and other normal business expenses from a bank account instead of entirely in cash. In contrast, some dispensaries in Colorado, he said, have huge vaults where they keep their cash on site, which could also be the plan of some Illinois dispensaries that don’t have bank accounts.
Forbes reported that many dispensary owners don’t like to talk about the particulars of the way their money is handled. One operator in Denver told the magazine:
“Asking someone about their banking is like asking them what they wear to bed at night. It’s an intensely personal question, even within the industry.”
But even though Seven Point will have a bank account to which they could accept debit or credit card payments, they’ll still have to accept money from their customers in cash.
The laws that create problems for dispensaries to conduct banking business mostly are regulated on the federal level. Marijuana, though legal as a medicine in 23 states, is still a Schedule I drug on the national level, meaning it is illegal to buy, sell and use for medical purposes or otherwise. Many banks will not provide accounts for dispensaries, even ones who have state licenses, and no major credit card companies will allow their cards to be used at such locations at tills. Those banks also refuse to provide cash to most ATM companies who install machines in the dispensaries.
From Forbes:
“…[T]he institution would be conspiring to distribute marijuana,” writes University of Alabama law professor Julie Andersen Hill in a paper she presented at a conference on marijuana and federalism last [September]. “By facilitating customers’ credit card payments, the institution would be aiding and abetting the distribution of marijuana. And by knowingly accepting deposits consisting of revenue from the sale of marijuana, the institution may be acting as an accessory after the fact.”
Bank employees could be charged with money laundering and could end up in prison for between five and 20 years, so major banks are nearly entirely hands-off when it comes to medical marijuana.
Though inconvenient, says Zerman, this inability to pay with plastic at dispensaries can be solved when customers have easy access to cash at the stores. But many ATM operators will not allow their machines to be placed in dispensaries because their cash supplies come from banks which will not do business with medical marijuana sellers. This can cause issues for the dispensaries and the customers.
For dispensary owners who want to follow the law, they have limited options to provide their customers cash. Others are willing to skirt the law by programming their ATMs (or similar point-of-sale machines) to register as restaurants or stores with names different than their real ones. This is against most bank’s regulations, which, as Zerman points out, is a problem in and of itself. Customers or credit card companies could become suspicious and investigate such dispensaries, levying fines that would cause issues for dispensaries and their customers.
But the practice could become an even bigger problem in the future. Zerman said that if/when credit card companies and ATM operators become more willing to work withmedical marijuana dispensaries, a large group of them could be automatically disqualified from the outset because they committed fraud. Then, their customers could choose to move to dispensaries which have easier payment options and their businesses could suffer.
“There is definitely this lack of transparency and some fraudulent behavior that’s happening that really…puts all the relationships in jeopardy for the future.” Zerman said. “It shouldn’t be like that.”
He encourages his fellow medical marijuana dispensary owners to “respect” the current laws and to work around them legally until federal legislation changes. Of course, he advocates for the use of his ATMs as that legal workaround.
Zerman observed these banking problems in Colorado, where medical marijuana has been legal since 2001 and recreational marijuana has been legal since 2014. He said he knew that his combination of experience with ATMs and his involvement in the medical marijuana industry perfectly positioned him to be able to help find a solution to such problems to implement in Illinois from the inception of the industry in the state.
Zerman said he is in the process of reaching out to other dispensary owners throughout Illinois to arrange ATM contracts at their stores. He said that the presence of ATMs in Illinois dispensaries will be good both for patients and for operators. The customers will have a more convenient avenue to buy their medication while dispensary owners can legally benefit from the improved customer service the ATMs provide.
“The dispensaries have so many different compliance issues at it is, just with the product that they’re selling. They don’t really need to get involved with other compliance issues on the financial side of things, too,” Zerman said.
Editor’s note: This post has been updated to clarifying banking regulations.
NEXT ARTICLE: House approves bill to decriminalize marijuana in Illinois
[RECOMMENDED]
Rejected medical marijuana growing applicant sues, saying state failed–again
Devil’s Advocate: Legal marijuana in Illinois? Give it 10 years
Medical marijuana dispensary owner awaits instructions from state on using newly granted licesnse
Illinois medical marijuana treatment anything but compassionate
Want to tell your elected officials what you think of the state of government in Illinois? Use our Sound Off tool.
Caitlin Wilson is a staff writer for Reboot Illinois. She graduated from Loyola University Chicago, where she studied journalism and political science. Caitlin has become both endeared to and frustrated with her adopted home state and wants to bring Illinoisans the information they need to actively participate in the politics that directly affect them. You can find Reboot on Facebook here and on Twitter at @rebootillinois.