The small sign on the door at Cannabend LLC, a medical marijuana dispensary on N. U.S. Highway 97 in Bend, is clear: Cash only.

Dispensary co-owner Ron Koch said legal advice he received cautions that marijuana dispensaries are selling something the federal government considers illegal. Should federal tolerance for legal marijuana one day end, bank accounts full of marijuana profits may be seized, he said.

“We’re already one felony deep,” said Koch, referring to the federal stance on marijuana sales. “We’d rather not have several more on top.”

Despite that fear, real or not, consumers may use their credit or debit cards to purchase marijuana at a handful of medical marijuana dispensaries in Bend. That means those dispensary owners cleared an important first hurdle: They established a bank account. Without that account, a merchant service provider has nowhere to route the money it processes from credit card transactions.

Opening an account is sometimes a matter of creating a “diversified business model,” said Sam Stapleton, owner of two DiamondTree dispensaries in Bend. “Banking institutions, if you have a creative business model, and can show you’re not 100 percent cannabis,” he said last week, “they’ll give you an account.”

On the other hand, a dispensary owner who tells a bank “We’re a pot shop” will get only one reply, Stapleton said: “See you later.”

In Oregon, sales of recreational marijuana became legal Oct. 1 for anyone 21 and over.

Cashless transactions are not only convenient for consumers, but dispensary owners say they reduce the amount of cash on hand. Operating as a cash-only business invites crime, said marijuana advocates and critics alike. The federal government issued guidelines in February 2014 for states where marijuana is legal, including banking regulations, but most banks seem unwilling to take advantage of them.

Banks may open accounts for cannabis merchants, provided the banks file a quarterly “marijuana limited” suspicious activity report, according to the U.S. Treasury Department. Despite that, Stapleton and other dispensary owners interviewed for this story said major banks in the recent past have closed their accounts.

“It is currently Wells Fargo’s policy not to bank marijuana businesses, based on federal laws, under which the sale and use of marijuana is still illegal,” Cristie Drumm, Wells Fargo Rocky Mountain Regional spokeswoman, wrote in an email Monday.

The leeway given banks by the Treasury and Justice departments to handle marijuana business accounts could disappear with the 2016 general election, said Bend attorney Michael Hughes, whose clients include marijuana businesses.

“Say (Gov.) Chris Christie (R-N.J.) is elected president, and he’s riding out here to shut down dispensaries,” Hughes said. “Most banks with multiple million-dollar accounts aren’t willing to risk all that.”

Hughes said he counsels his clients to be transparent at all times. That avoids a bad situation for both his clients and their banks, he said. In some cases, banks take a “don’t ask, don’t tell” policy, Hughes said.

“Some people don’t want to tell the bank, or the bank kind of knows and they’re winking and nudging,” he said.

Consequently, dispensaries that allow credit card purchases may have represented themselves as something else, like a consultant or garden shop, to obtain a bank account, said Mark Oury, general manager of Guardian Data Systems, of Vancouver, Washington, a merchant services provider for high-risk businesses. The account may stay open until an audit.

Guardian provided debit-card processing for marijuana businesses until about six months ago, said company founder Lance Ott. Guardian provided a “cashless” automated teller transaction, in which the purchase amount was taken from the buyer’s account as a cash withdrawal rather than debited as a retail transaction.

At Garden Kings, a NE Franklin Avenue dispensary, owner Charles Hood said Wells Fargo closed his business account several weeks ago. He switched to Greenito, a Denver-based company that sells a form of voucher to customers who use it as credit at participating marijuana dispensaries.

“Everybody’s having a problem with banking,” Hood said Monday.

Most dispensary owners contacted for this report deal only in cash, such as Mark Capp, co-owner of Oregon Euphorics on SW Century Drive. He questioned the legality of any credit card transaction at a marijuana dispensary. Others, such as Jeremy Kwit, owner of Bloom Well, a dispensary on Division Street, said they have transparent banking relationships.

Kwit accepts debit and credit cards at his dispensary, as does Stapleton at DiamondTree and Aviv Hadar, co-owner at Oregrown dispensary on NW Wall Street. Hadar, Kwit and Stapleton declined to identify their banks.

Meanwhile, a spokesman for the Oregon Department of Consumer and Business Services said credit and debit purchases at licensed marijuana dispensaries are relatively safe.

“We don’t see any concern on the part of the consumer,” said Jake Sunderland, department spokesman. “If you’re using plastic (at a marijuana dispensary), you can reasonably assume your data will be as secure as it would be at a big-box retailer.”

If some marijuana dispensaries may not be totally forthright with banks, they have little choice if they want to do business, even beyond accepting credit and debit cards, said Michele Heney, a professor of accounting at University of Oregon. Paying employees, vendors and utilities, even taxes, all are made more complicated in a cash-only business environment.

“On the one hand, they’re just trying to do business,” she said. “On the other hand, it’s not an entirely legitimate way, but I would argue they’re doing the best they can.”

— Reporter: 541-617-7815,

jditzler@bendbulletin.com

Editor’s note: This story has been corrected. In the original version, the description of Guardian Data Systems business was incorrect. Also, the original version incorrectly stated Oregrown’s relationship to a credit union.

The Bulletin regrets the errors.