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Pot Prices Double as Colorado Retailers Roll Out Green Carpet
Matthew Staver/Bloomberg via Getty ImagesAn employee counts cash from the sale of recreational marijuana inside the Evergreen Apothecary in Denver, shortly after marijuana became legal for sale in Colorado last month.
By Karen Weise

"Here's the first one," Elliott Klug said as he reached into a soft-sided briefcase and handed over a tax document and manila envelope filled with more than $3,000 in cash. Klug stood in front of the counter facing a Colorado official to pay taxes for Pink House, the chain of marijuana stores he founded.

Despite his laid-back appearance, which features a straggly ponytail and mutton chops, Klug's money was neatly bundled in stacks of $1,000 or $2,000, sorted by denomination; all bills faced the same way. "I guess I'm OCD or something," he said with a chuckle. Klug had trained his staff to organize the money this way to enforce precision. "I hated going somewhere and finding out I was $20 short," he explained.

Thursday was Colorado's deadline for tax filings based on January sales, the first month in which approved retailers could sell pot for recreational use. A colleague of Klug's had already paid Pink House's Denver city taxes, so he was delivering the state portion: a 2.9 percent sales tax on medical marijuana and a 12.9 percent sales tax on recreational pot. Colorado Governor John Hickenlooper's revised budget expects marijuana taxes to total $98 million a year, about 40 percent above the initial estimate of $70 million.

Klug was handing over thousands of dollars in hard currency because, like most marijuana entrepreneurs, he's stuck running his business largely in cash.
Most banks, even after getting tacit approval from the federal government, won't take pot clients, even from businesses operating legally under state law. A number of companies have managed to maintain bank accounts. Some operate with full knowledge of the bank; others, like Klug's, fly under the radar. But because he can deposit only so much in each account without setting off warning signals, he reserves bank funds largely to meet payroll. Almost everything else, including rent and taxes, he pays in cash.

Klug drove to the state tax office in a Honda Element emblazoned with his bubble-gum company logo and Statue of Liberty cartoons, a handgun next to the driver's seat for protection. As he circled the parking lot looking for a spot, a man stepped up to the car and pulled aside his long, black coat to reveal a badge on his waist. The Department of Revenue official told Klug to park directly in front of the building in a no-parking zone.

"Hi, I'm Robert," the man said, shaking Klug's hand and cracking a joke about how unexpected it must be to get protection from the state. He ushered the marijuana merchant inside the building, where a uniformed guard took over escort duties, all the way back to Window 1. "From now on," the guard told Klug, "it will always be Window 1."

Janice, a smiling clerk wearing teal eye shadow, greeted Klug through the window and got to work. She and a colleague counted his cash -- sometimes in an automatic counter, sometimes by hand -- and checked the larger bills for counterfeits with a special pen. Janice stamped a form and gave Klug a receipt, then repeated the process with a new tax document and envelope for his next Pink House location. "Last one for this round," Klug finally told Janice, handing over an envelope for the final outlet. When she shook out the cash, a few coins jingled onto the desk.

While Klug paid his taxes over a nearly 15-minute span, the guard escorted two men into the room to await the marijuana tax window. The first, in a baseball cap and sunglasses, held a large brown valise that caught Klug's eye. A man in shorts carried two binders but no large bag. "He must have checks," Klug surmised.

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You can buy all the reverence, kissing big brothers' ass, you can afford... Window one...on down to the starvers, begging for, relief, from OBAMACARE; properly, spelled: O-bam-A MACABRE... Dr. Death... end of life... you've spent, enough, medical care minutes... management... Edgrrr...

March 02 2014 at 8:29 AM Report abuse rate up rate down Reply

Trading the oil market is an easy to make money. Especially when you apply the Bionic Traders method. Want to learn more? Just Google Bionic Traders and you’ll see what I mean.

February 25 2014 at 7:50 PM Report abuse rate up rate down Reply

The war on marijuana is the same like the war on cancer. There are a lot of money and a lot of people making lots of money off it.

February 23 2014 at 7:12 AM Report abuse +1 rate up rate down Reply

Large envelopes always come in handy for carrying huge amounts of cash. Colorado is now my favorite state. Texas is the worse. And of course S. Carolina is a close second worse.

February 23 2014 at 1:59 AM Report abuse +1 rate up rate down Reply


February 22 2014 at 6:13 PM Report abuse +1 rate up rate down Reply

i cant believe the government is allowing this crap. somebody has got to be collecting a lot of blood money for these pot heads. PEOPLE GET A LIFE ,IT IS ILLEGAL

February 22 2014 at 6:12 PM Report abuse -1 rate up rate down Reply
1 reply to cjtoy7's comment

The law, is, what's illegal. Legal, means, legislated. Legal, is, not, likely, to be, lawful. Did you ever see a law library, full of repealed, laws ??? What's that, tell you...??? Edgrrr...

March 02 2014 at 8:37 AM Report abuse rate up rate down Reply

The War on Marijuana has be going on now for over 75 years. Presently the usage of marijuana is about the same as cigarettes among teenagers. Is that called success? Results are what matter. In the Netherlands, where it's legal, they have a far lower use of marijuana among teenagers. They have a sensible approach that works. I s marijuana a grave danger to society? Every year there is several hundred-overdose deaths from alcohol. How many people died overdosing on marijuana? Zero. Alcohol is known to cause violent or aggressive behavior, marijuana does not. Some people think marijuana is the gateway drug to harder drugs. Why, because it's easier for a kid to buy marijuana than alcohol or cigarettes? Don't believe it? Do you think a drug dealer going to ask a kid for ID? So what do you think would work best to reduce usage, changing people's mindset to live a healthy lifestyle, or the threat of going to prison? The fact is over the last 30 years of prohibition marijuana usage didn't decrease at all, it actually increased. Though cigarettes which are far more addictive, yet legal, usage actually decreased. The fact is tax monies would be better spent on education and PR campaigns. We must ask why our government is intentionally ignoring the facts? Currently the only thing wasted is tax money. Just look at the results, far more people have smoked marijuana today, by percentage, than in 1937. Our country's marijuana policy has been a failure from start to finish, and we've spent a lot of money going backwards. Also we lost all the tax monies by not taxing it. Talk about waste in government. 75 years of wasted money on enforcement, judicial, and prison systems. Should the police and the courts continue to waste their resources on simple pot possession and use charges, while putting aside efforts on more serious crimes? The fact is prohibition gave rise to the power of organize crime. It is well known that Al Capone was a big supporter of the prohibition of alcohol. Why? There's a lot more profit to made in the untaxed market. There's so much profit that Capone bribed numerous politicians and law enforcement officials. When the prohibition of alcohol was lifted, the crime rate actually dropped. It brought the end of organized crime fighting for control of the alcohol market. That's called success! The strategy right now is to ensure that marijuana is not taxed or sales regulated. Presently the drug cartels are controlling the production and sale of marijuana, not our government. There is a drug war happening south of the border that is undermining the Mexican government. Half the revenue of the drug cartels comes from the production and sale of marijuana. By legalizing marijuana would effectively remove 50 percent of the cartels monies. And any business, legal or illegal, which loses half their revenue, faces a great chance of complete collapse.

February 22 2014 at 2:15 PM Report abuse +2 rate up rate down Reply

So why do some law enforcement officials want to continue this endless war on marijuana? Our federal government gives law enforcement financial incentives to make marijuana arrests. There are no financial incentives for robbery, rape, and murder arrests. So the result is every 43 seconds someone is arrested for marijuana, while many violent crimes go unsolved. What's wrong with picture? Because our law enforcement directives are misguided it's resulted in lack of focus on our nation's and public security. Acts of terrorism and mass murder in our country 40 years ago was a rarity. Our government is running up deficits, spending billions yearly fighting marijuana, and losing billions by not taxing marijuana. There are some who think that the Government should have final say regarding your health, others think the Government should increase more spending to fight marijuana. We need to have this issue in the debates, and have the candidates state their stance regarding the current disastrous marijuana policy. Sadly many candidates chase the special interest monies, and lobbyists don't always lobby for what is best for the country. Most people think marijuana as drug business, though historically hemp was an important all natural and renewable material for American industry. In 1925 Henry Ford thought hemp ethanol was going to be the fuel of the future, and it was the original fuel for his automobiles. Also George Washington and Thomas Jefferson grew it, and the original drafts of the Declaration of Independence were written on hemp paper. The fact is hemp was used to make plastic, soap, and clothing as well. When the Marijuana Stamp Tax Act of 1937 was created, the America Medical Association actually protested to Congress. The reality is the Marijuana Tax Stamp Act was created to ban hemp in industry by the government refusing to actually issue the stamp to anyone, including the non-drug hemp industries. In 1969 the Supreme Court repealed the law because it violated the 5th Amendment. Within a year, in 1970, congress created the Controlled Substance Act which classified marijuana more dangerous than cocaine, opium, and meth, listing it as Schedule I, which also meant nothing could be produced from the plant, including non-drug uses. Are we to believe our government that the vapors from model glue is safer than marijuana? Oh well for capitalism values. Another reason making it illegal was repressive in nature, to counter the civil rights and anti-war movements. The Incarceration Economy was born. In 1970 our debt was 35% of the GDP, now it's almost 100% because of this endless costly war on a plant created by God. Because of prohibition America went from the "Land of the Free" to the country that has the highest incarceration rate in the world. Finally, how do I really know why marijuana should be legal? The Bible tells me so (Genesis 1:11-13, Genesis 1:29-31, Ezekiel 47:12, Revelation 22:1-5). Outlawing a plant that God created is truly Satan's trickery to turn people against God. Everything that God created has a purpose (Isaiah 42:5-9). God gave us the right of free will, even our founding fathers realized this when writing our Constitution. But slowly our government has been slowly eroding these God given rights (Luke 7:28-35). Will our government outlaw the burning of incense in church because of public health concerns? (Psalm 119:81-88, 2 Corinthians 11:1-33). It's now the time to end the prohibition of marijuana. We need this issue in the debates. Any politician who is against ending prohibition is either simply inept or utterly corrupt. It's time....Legalize it, Regulate it, Tax it.

February 22 2014 at 2:15 PM Report abuse +3 rate up rate down Reply

apathy, vote...

February 22 2014 at 1:57 PM Report abuse rate up rate down Reply

Sickening. It doesn't matter how much extra millions in revenue are generated by the sale of pot, the money will be funneled down a black hole generated by the left-wing. Colorado voters were very very foolish to vote themselves a tax hike.

February 22 2014 at 12:17 PM Report abuse -3 rate up rate down Reply