Marijuana businesses, excluded from finance, face unusual risks – The Economist

MANY marijuana growers in northern California, America’s biggest source of the stuff, had expected this autumn’s harvest to be the largest ever. After all, recreational marijuana becomes legal in the state in January. Instead, wildfires in October—spreading so fast they killed 43 people—burned up half the marijuana growing in the area’s tri-county “Emerald Triangle” alone. Some reckon the fires set a record not just for burnt pot, but also for the value of banknotes turned to ash.

Although 29 American states allow sales of marijuana for medical use (or medical and recreational use), federal law still classifies it as a “schedule 1” drug like heroin. Firms handling marijuana proceeds can be prosecuted for money laundering. Ned Fussell of CannaCraft, a maker of marijuana products, says that a few firms open a bank account under an alternative identity. But banks almost always find out. So cannabis businesses operate almost exclusively in cash. Many pot farmers fled the fires without their banknotes.

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Chiah Rodriques of Mendocino Generations, a cannabis-genetics consultancy, knows two dozen people who lost a hoard. One burnt cabinet had held $250,000. Cheryl Dumont, from a Mendocino County cannabis co-operative, says that of about 20 stashes buried by members or neighbours, only one was deep enough to survive. The gold and

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