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One in Two Cannabis Dispensaries is Robbed or Burglarized? Perhaps not …

Are there any good studies on robbery and burglary rates of cannabis related businesses as compared to other businesses? Are cannabis related businesses robbed or burglarized at higher rates than other cash intensive businesses?

These questions may not be answered – I know I haven’t found good answers, and I have looked. Two written statements by the Credit Union National Association (CUNA) and American Bankers Association (ABA) provide two very different answers.

The Senate Committee on Banking, Housing, and Urban Affairs held a hearing on “Challenges for Cannabis and Banking: Outside Perspectives” on July 23, 2019. Both CUNA and the ABA had representatives provide written testimony and answers questions from the Senators. The written statement from the representative of CUNA included the following statement (which was picked up by one of the Senators during the question and answer session):

“A 2015 analysis by the Wharton School of Business Public Policy Initiative found that, in the absence of being banked, one in every two cannabis dispensaries were robbed or burglarized—with the average thief walking away with anywhere from $20,000 to $50,000 in a single theft.”

One in every two cannabis dispensaries is robbed or burglarized! That is a stunning statistic. Actually, it is really two statistics because of the significant difference between a burglary and a robbery. Without getting into legal minutia, burglary is entering into a structure or dwelling with the intent to commit a crime; robbery is taking something from a person using force, or the threat of force, to do it. Put another way, a burglary becomes a robbery if there is someone in the structure or dwelling and the perpetrator uses force or the threat of force to take something. Both are serious crimes, but robbery is much more serious than burglary, as it (the robbery) involves direct victims.

The written statement from the American Bankers Association included the following:

“In Denver, [the roughly 500] cannabis businesses make up less than 1% of all local businesses but have accounted for 10% of all reported business burglaries from 2012-2016. On average, more than 100 burglaries occur at cannabis businesses each year according to the Denver Police Department, and burglaries and theft comprise almost 80% of Denver’s cannabis industry-related crime.”

CUNA’s statement that one in every two cannabis dispensaries is robbed or burglarized caught me by surprise.  The ABA’s statement – that roughly one in five cannabis business is burglarized – seems more reasonable. Logically, if one in every two dispensaries was robbed or burglarized, there would be headlines. I can’t find them. So I looked into CUNA’s source for its one in two conclusion, what they called “the Wharton analysis.”

It doesn’t exist.

Here’s a link to the Wharton “analysis” … https://publicpolicy.wharton.upenn.edu/live/news/2214-cash-crime-and-cannabis-banking-regulations-in-an/for-students/blog/news#_edn2.

First, it is a 2017 student blog written by three students which bears the following disclaimer: “The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.”

This November 20, 2017 student blog – not a Wharton Public Policy Institute publication at all – is titled “Cash, Crime, and Cannabis: Banking Regulations in an Illegal Market”. Under the heading “Risky Business”, the three student authors write:

“Not only are cash businesses conducive to tax manipulation, they also hurt many individuals, because of the risk of crime. In 2015, one in two cannabis dispensaries were robbed or burglarized, with the average thief walking away with anywhere from $20,000 to $50,000 in a single act [citation]. Mitch Morrissey, district attorney of Denver, notes a direct increase in crime cases related to the marijuana industry, and sees the reasoning behind the robberies stating: ‘You hit a 7-Eleven, you’ll get 20 bucks. You hit a dispensary, you’ll get $300,000 on a good day’ [citation].”

The citation the students provide is http://www.sivallc.com/the-growing-need-for-a-cannabis-dispensary-security-plan-infographic/

That page is no longer available. But the citation is not to an article or study, but simply to the infographic, which they label “Dispensary Security Infographic” and the source is shown as “Bubulyan Consulting Group”.  Bubulyan Consulting Group is actually Bulbulyan Consulting Group, which was the original name of Siva Enterprises. Avis Bulbulyan is the CEO of Siva Enterprises (www.sivallc.com).

I haven’t reached out to Mr. Bulbulyan to ask him where he obtained the data for the inforgraphic, but it appears that the source was an NBC news story from February 4, 2014 (available at https://www.nbcnews.com/storyline/legal-pot/high-crimes-robber-gangs-terrorize-colorado-pot-shops-n20111). That story includes the following:

“In 2009, the Denver Police Department estimated that about 17 percent of marijuana retail shops had been robbed or burglarized in the last year. That was good news: a bit less than liquor stores (20 percent) and banks (34 percent), and on par with pharmacies. Today, however, a darker picture has emerged. There are about 325 marijuana companies in Denver, based on an analysis of licensing data done for NBC News by Marijuana Business Daily, a leading trade publication. (Most companies hold numerous licenses.) At the same time, there have been about 317 burglaries and seven robberies reported by these companies in the last two years, according to police data. That’s an annual robbery and burglary rate of about 50 percent, more than double what it was in 2009. While a Denver Police spokesperson disputed these figures, the department doesn’t have its own.”

As written above, there is a significant difference between a burglary and a robbery. Using NBC’s numbers from its 2014 story, “that’s an annual robbery rate of about 1% and a burglary rate of about 49%.”

So what is the experience of law enforcement and the cannabis industry?

Colorado statistics seem to paint a very different picture

The City of Denver has an “Open Data” effort that includes marijuana-related crime (“crimes reported to the Denver Police Department which, upon review, were determined to have clear connection or relation to marijuana.”). It is available at County of Denver Marijuana Crime . That data suggests that marijuana-related business burglaries peaked in 2013 at 101, and dropped to 74 for the first eleven months of 2018. That suggests a burglary rate of 12% – 15%. Marijuana-related business robberies peaked in 2014 at 5: they recorded 1 such event in 2018. That rate is between 0.2% and 1%. Notably, these statistics are not comparing the marijuana-related crime rates with overall crime rates. It may well be that marijuana dispensaries are burglarized and robbed at roughly the same rate as other cash intensive businesses.

In an October 2018 report by the Colorado Division of Criminal Justice on organized crime cases in Colorado, the DCJ wrote “there has been concern that, due to the cash-only nature of the industry, robbery would be prevalent, but this has not been the case.” This seems in keeping with the 2014 NBC story that anecdotally suggests a robbery rate of 1% for cannabis dispensaries (in the Denver area).

Some research also suggests that the crime/cannabis nexus isn’t as strong as the anecdotes suggest, and in fact state-legal cannabis dispensaries may help reduce crime.

In a paper published in May 2018 “High on Crime? Exploring the Effects of Marijuana Dispensary Laws on Crime in California Counties” (http://ftp.iza.org/dp11567.pdf) the authors looked at violent and property-related crimes in California on a county-by-county level, and concluded that:

“The results suggest no relationship between county laws that legally permit dispensaries and reported violent crime. We find a negative and significant relationship between dispensary allowances and property crime rates, although event studies indicate these effects may be a result of pre-existing trends. These results are consistent with some recent studies suggesting that dispensaries help reduce crime by reducing vacant buildings and putting more security in these areas.”

Although this study doesn’t refer to robberies or burglaries at cannabis dispensaries, it seems logical that if those dispensaries were being robbed or burglarized at a rate of 50%, the study would have pointed that out.

A study published in the Journal of Preventive Medicine in March 2018 https://www.sciencedirect.com/science/article/pii/S0091743517305078 by university researchers funded by the Centers of Disease Control and Prevention looked at “the geography of crime and violence surrounding tobacco shops, medical marijuana dispensaries [MMDs], and off-sale alcohol outlets in a large, urban low-income community of color” using data from 2014. The abstract provides:

“Results indicated that mean property and violent crime rates within 100-foot buffers of tobacco shops and alcohol outlets—but not MMDs—substantially exceeded community-wide mean crime rates and rates around grocery/convenience stores (i.e., comparison properties licensed to sell both alcohol and tobacco) …”

Conclusion

There is no doubt that cash intensive businesses – bars, restaurants, convenience stores, casinos, cannabis dispensaries – are more likely to suffer burglaries and/or robberies than those businesses that are not cash intensive. And it seems logical that cannabis dispensaries, which struggle to get and maintain banking relationships and are therefore more cash intensive than other businesses, and have a very valuable and largely untraceable product on their premises, are more likely to suffer burglaries and/or robberies at an even higher rate. But that combined rate is probably not 50%. It is probably closer to the ABA’s figure (from the Denver Police Department, apparently) of 20%, or even the County of Denver data that suggests a rate of 12% – 15%.  Regardless, public policy should be driven by accurately reported and cited information: citing a 2015 Wharton Business School study is very different than citing a 2014 NBC News report. Although the robbery rates and burglary rates may in fact be high, and the NBC News report accurate, we are all better served if the bases of our collective public policy decisions are known and accurate.

The Federal Government must step up and provide legislation, regulation, and regulatory guidance to the financial services industry so that cannabis businesses and cannabis related businesses can have access to the full suite of banking services – notably deposit accounts, cash management services, payroll services, merchant banking services, credit, and insurance. The SAFE Banking Act might be a good first step.