Colorado marijuana industry gets innovative in securing cash |

Colorado marijuana industry gets innovative in securing cash

A kiosk was installed at Herbal Bliss, allowing customers to choose and pay for products electronically while a budtender fills the order.
Courtesy of C4EverSystems |

Frisco-based marijuana dispensary Herbal Bliss will be the first to test-drive a new product meant to secure cash transactions and reduce opportunities for theft or illegal cannabis purchases.

The banknote recycler that was officially commissioned into use on Friday will accept cash payments, give back change, check for counterfeit currency and provide a clear record of all transactions conducted at Herbal Bliss.

“Starting today, there will be no money going through the register at Herbal Bliss,” said Gregg Hodge, co-founder of financial services startup C4EverSystems LLC. “At the point of paying, instead of handing the budtender $40, you put $40 into the bill accepter.”

Hodge, a Frisco local, has worked in payment automation for the past seven years, creating systems for the government, utility collections, parking tickets and corrections, to name a few. Two years ago, he decided to apply his knowledge to the Achilles’ heel of the cannabis industry: cash collections.

“People are walking in (to banks) with suitcases full of cash,” Hodge said. “It’s taking them hours and hours to count cash.”

He hopes the new technology will improve security, and provide credibility to the source of the cash when it is brought over to the bank. Though it was just day one, Hodge seemed confident about entering into a new area of the cannabis industry.

“We can knock this out of the park,” he said.


Herbal Bliss will have two products: a banknote recycler and a C4Ever kiosk. The key difference is, with the banknote recycler, customers order products like before, but use the machine to pay. With the kiosk, customers place orders directly through the machine, pay, and wait for a budtender to fill their order.

“The machine takes the change and checks for counterfeit,” C4EverSystems vice president of operations Mikey Tuccelli-Margolin said.

He added the machine also checks the state system for records of transactions at other dispensaries that day, to see if customers have met their quota for possession. If they tried to purchase more than the allotted one ounce of retail marijuana (or two ounces of medical marijuana), “it wouldn’t even allow them to add it into the cart,” Tuccelli-Margolin said.

As far as security is concerned, the cash is stored within the machine, and may only be accessed by the individual who has a key. Adilas Products provides the machine’s point-of-sale systems, tracking inventory, cashflow and other features. The Salida-based software company focuses exclusively on software systems for dispensaries.

“This sort of thing is critical for banks,” said Mark Goldfogel, executive vice president of industry relations for Fourth Corner Credit Union, a cannabis-centered financial company. While Fourth Corner was authorized by Colorado in 2014, a district judge dismissed a lawsuit by the credit union against the U.S. Federal Reserve Bank of Kansas City in January after Fourth Corner was denied a master account necessary to accept credit- and debit-card payments.

“I’ve been trying to get this done for years. From a banking standpoint, you know this cash, where it came from,” Goldfogel said. “Part of the problem with this industry is there’s so much cash floating around loose.”

With the funds going directly into the locked kiosk, it would be much more difficult to manipulate transactions, giving banks more confidence that the funds being deposited have no connection to illegal wholesale transactions or cartels.

“In my opinion, everything about cannabis and its evolution is going to come down to transparency,” he added.

While all transactions are camera-monitored, the kiosks may provide dispensaries an advantage in deterring theft. Between storing large volumes of cash and valuable product, the cannabis industry has seen a few high-profile heists, such as $300,000 stolen from a Denver grow facility in 2014.

“We find about 90 percent of all theft in the industry is internal,” Canna Security America CEO Dan Williams said.

Williams created the Canna Security America (OTCQB: CSAX) in 2009, after working with the Colorado Department of Revenue to help set security regulations for medical marijuana. He first started in assisting businesses with the licensing process, before offering security systems and surveillance. Since then, the company has expanded vertically to offer armed security guards and vehicle transport.

Most recently, the company created a new division, the Cloverton Group, to provide armored Mercedes Benz Sprinters to transport cannabis products to dispensaries, and cash straight to the bank.

“We have a good working relationship with the banks as armed security guards,” said Josh Ray, director of security for Cloverton and former SWAT operator.

Product and cash are transported in separate, GPS-tracked cases in the bulletproof, GPS-tracked cars. Cloverton currently operates two of the vehicles statewide.

“The vehicle took six months of conceptual design,” Williams said. “Just one of these takes three months to make.”

On the outside, the SUVs have a simple, black-and-white design. You won’t see any marijuana leaves or other indications as to the vehicle’s contents. The cars are so nondescript looking that once, a woman in Denver thought they were a catering business delivering a cake she had ordered, Cloverton sales director Signe Martin said.

“It gives the owners peace of mind,” she said. “It’s extremely reasonably priced when you consider your own life or an employee’s life on the line.”

Since his company went public in December, Williams added he plans to expand Cloverton services to California, Arizona, Oregon, Nevada and other states.

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