Outco CEO Lincoln Fish inspects cannabis plants in one of the company’s grow rooms in an unincorporated area of El Cajon. File photo by Jamie Scott Lytle

Outco CEO Lincoln Fish inspects cannabis plants in one of the company’s grow rooms in an unincorporated area of El Cajon. File photo by Jamie Scott Lytle

— Armored vehicles. Vaults. Talk of cryptocurrency.

These are realities for San Diego marijuana businesses like Outco that are unable to obtain bank accounts.

Congress and the California Legislature are wrestling with bringing cannabis cash out of the shadows, while marijuana-related businesses are paying heavily for banking workarounds.

The medical marijuana industry has long grappled with banking woes. But the dawn of legal recreational marijuana in California in January pumped more money into the industry, and newbies looking for a piece of the action are running into challenges. Think paying employees in cash or obtaining loans.

Security Problems

Then there are security headaches stemming from being a mostly cash company, which demands constantly shuffling money for dispensaries like Outco.

“Bottom line is there’s never much cash around here, and what leaves here does so in a very secure way,” said Lincoln Fish, CEO of Outco.

The federal government classifies marijuana as a Schedule 1 drug, so federally-insured banks are reluctant to touch cannabis money for fear of money laundering charges.

Outco is making it work, though Fish said he would happily pay bank fees much higher than a typical business to dispense with complicated security procedures.

The company relies on safes and offsite vaults. Fish declined to elaborate, but did say security poses a significant challenge, especially given Outco’s large footprint.

Outco’s marijuana constellation encompasses a recreational dispensary set to open in Sorrento Valley later this year, a medical marijuana dispensary and indoor grow space in unincorporated El Cajon, and other cultivation and distribution operations.

Fish has been in conversation with many banks, nearly getting an account with one around the 2016 presidential election. But Atty. Gen. Jeff Sessions’ anti-marijuana stance scuttled the deal.

Occasionally, Fish said, there are whispers of the odd bank taking on marijuana clients, usually met with a bank denial to avoid being overwhelmed from a rush of cannabis business.

Optimistic for Change in Banking Rules

While he’s optimistic relaxed banking rules will come, Outco in the meantime is considering cryptocurrency from

MoneyTrac Technology, a subsidiary of San Diego-based Global Payout. This cryptocurrency, geared toward marijuana firms, is built on blockchain, a decentralized digital ledger.

The cost for security and cash management services can represent 15 percent to 40 percent of gross revenue, according to Hezekiah Allen, executive director of the California Growers Association. Often services come at fixed prices, disproportionately hurting smaller businesses.

Another problem is that loans, necessary to scale up or for one-time regulation costs, are difficult to come by. Locking down a mortgage can be tough too.