Cannabis Farms and New Security Laws

Marijuana is the fastest growing market in the United States. In 2014, cannabis sales amounted to $2.7 billion. Nearly half of that was in California and a third in Colorado, meaning over 80% of those billions came from the markets of just two states. It’s a giant, giant business that’s only going to get bigger as more and more states begin to legalize.

However, one issue is that we’re seeing a fragmented form – a wave, if you will – of legalization. While some states legalize marijuana, others do not. This means that, ironically, there is a growing black market for legal marijuana. What a lot vendors and cannabis farms are seeing is that their products are prime targets for theft. Now, thievery amongst growers has always been an issue, but with the advent of legal channels it actually makes it much safer to steal. After all, who would a desperate individual prefer to steal from: a local drug lord with a penchant for biblical levels of violence, or a legitimate business that must use legal and lawful channels for self-defense?

Because there is a large potential for someone to come over state lines, steal marijuana, and then take it back over state lines to then sell it, a lot of these laws now require strict security measures. Washington’s surveillance requirements are stated as such:

(WAC 314-55-083; 3) At a minimum, a licensed premises must have a complete video surveillance system with minimum camera resolution of 640 x 470 pixels or pixel equivalent for analog. The surveillance system storage device and/or the cameras must be internet protocol (IP) compatible. All cameras must be fixed and placement shall allow for the clear and certain identification of any person and activities in controlled areas of the licensed premises. All entrances and exits to an indoor facility shall be recorded from both indoor and outdoor, or ingress and egress vantage points. All cameras must record continuously twenty-four hours per day and at a minimum of ten frames per second. The surveillance system storage device must be secured on the licensed premises in a lockbox, cabinet, closet, or secured in another manner to protect from employee tampering or criminal theft. All surveillance recordings must be kept for a minimum of forty-five days on the licensee's recording device. All videos are subject to inspection by any liquor control board employee or law enforcement officer, and must be copied and provided to the liquor control board or law enforcement officer upon request. All recorded images must clearly and accurately display the time and date. Time is to be measured in accordance with the U.S. National Institute Standards and Technology standards.

The state of Colorado’s requirements read as such:

Prior to exercising the privileges of a Retail Marijuana Establishment, an Applicant must install a fully operational video surveillance and camera recording system. The recording system must record in digital format and meet the requirements outlined in this rule.

And…

1. All camera views of all Limited Access Areas must be continuously recorded 24 hours a day. The use of motion detection is authorized when a Licensee can demonstrate that monitored activities are adequately recorded.

2. All surveillance recordings must be kept for a minimum of 40 days and be in a format that can be easily accessed for viewing. Video recordings must be archived in a format that ensures authentication of the recording as legitimately captured video and guarantees that no alteration of the recorded image has taken place.

Essentially, if you want to grow and sell marijuana, you must have a very strong surveillance system to keep track of it. Any room where cannabis is being grown needs to be watched. Anywhere the cannabis is being sold needs cameras. Even the DVR/NVR that is recording all this footage needs a camera pointed at it. With so much stringency one has to wonder if the lawmakers got close to writing in an infinity loop or, at the very least, a security surveillance-Mexican standoff wherein every camera must be filmed by another camera. Forever. (Would have made for excellent business on our end, but alas, they did not go quite that far.)

Now, most businesses in general will want to keep an eye on their products, but the element here is the enforcement of it by law. It is mandated by law that that a seller use a large and robust surveillance system. Although it is mandatory, I can’t imagine many growers wouldn’t want such security in the absence of said enforcement. As mentioned, marijuana is being legalized in waves, leaving pockets of illegality that make the legal stores looking like “easy” targets for theft. The street cost of an ounce of marijuana can run into the hundreds, easily affected by what is essentially a prohibition premium. But if you can grow it legally in your state and see the cost driven down to around $50/oz, well, that’s prime pickings for the buzzards next door. Steal low, sell high!

But marijuana isn’t necessarily the only target for would-be thieves. Marijuana is still illegal under federal law. While the U.S. Treasury and Justice Department green lit banks doing business in the industry, many banks are too reluctant to participate based on risk assessments and/or stringent compliance laws. This means that very few banks will allow operations to deposit money earned from the marijuana business. It effectively forces the industry into operating on a ‘cash-only’ basis. So while marijuana has been legalized in places, the financial aspects of it have still been left to a murky aether of confusing compliance laws and uncooperative banking institutions. It’s still not clear where the IRS stands on this ambiguity, seeing as how it leaves the finances of the industry in a prohibition-style limbo, and that very prohibition-style limbo has a very proven track record for the promotion of laundering or tax evasion.

Of course, the real issue of being cash-only is that of security itself. If banks can be routinely robbed, it isn’t a huge stretch to imagine that a cash-only grower or dispenser would be similarly targeted. While the states are quite keen on protecting the plants being grown, the actual security of the individuals selling or buying the product is left in the air. Growers and sellers should absolutely be interested in personal security, regardless of whether it’s a surveillance system in their place of business, or if it’s just heightened awareness about who is around them as they walk down a street. It is all important!