More than three years ago, Noah Stokes was running a security company in Oregon when a nervous medical marijuana grower approached him. "Hey, you guys do security, right," the grower asked Stokes. The man's grow had been robbed. Someone had cut a hole in the ceiling, opened a door and loaded a truck with the harvest of several thousand square feet of grow space.
After a few more conversations with victimized marijuana businesses, Stokes started CannaGuard Security to focus specifically on the cannabis industry. His security firm has grown to have operations in numerous states including California, where state lawmakers have turned to the issue in their effort to start issuing licenses by the beginning of next year.
Until now, California cities have had to determine their own security requirements for legal pot businesses, but neither the state nor L.A. — the nation's largest market — has regulated it yet. That’s about to change now that voters have tasked both the state and L.A. — through the recent passage of Measure M — with regulating the industry.
Security concerns are common in an industry like marijuana that’s transitioning from the black market to the legal market. The threats to marijuana businesses are very real. L.A. dispensaries have seen their share of crime. While exact statistics for crime against dispensaries are rare, these businesses traffic in cash and weed, two valuable and highly fungible commodities.
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Tony Gallo, CEO of Sapphire Risk Advisory Group — a Dallas-based company that works with cannabis companies along with regular retailers and financial firms — said they’re “high-risk businesses” comparable to pawn shops and liquor stores. (The worst, he said, are convenience stores, which can sell both liquor and scratch lotto tickets.)
The refusal of major banks to work with legal pot companies has received a good deal of media attention but Stokes said that large security companies such as ADT Security Services won’t work with pot companies either, for fear of losing contracts with the federal government. ADT did not immediately respond to L.A. Weekly's request for comment.
Widespread requirements for sophisticated security programs and a lack of large providers has created a business opportunity. Security services aren’t cheap. Gallo said that startup security costs for a dispensary might be tens of thousands of dollars. But it can cost far more. In Pennsylvania, which legalized medical marijuana use last year, Stokes said the state currently requires dispensaries to maintain 24/7 video surveillance and store all of it for four years. For such a system, just the storage space and server could cost $200,000, he said. A camera system that turns on when it detects motion would require far less in storage costs but is potentially more vulnerable, he said.
L.A. and California cannabis business owners who blanch at security costs can take some comfort in knowing that not every facet of keeping their property safe demands huge outlays on equipment. “Creating a culture of honesty” at a dispensary can go a long way to protecting a business, Gallo said. Like most retailers, Gallo said between 60 and 70 percent of theft at dispensaries is committed by employees.