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New Rules Have Los Angeles Dispensaries Scrambling Not To Close

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Indoor Marijuana Grow Room with Plants in Soil Under LightsWhen it comes to marijuana dispensaries and their rules, it seems that anything goes with California’s law makers. The newest rules have dispensary operators scrambling to keep their doors open. While Californians have (for the most part) welcomed marijuana dispensaries to their communities, the state’s law makers have been unable to come to terms with the new industry, and have been unable to come to a conclusion on state-wide rules. That is, however, until a few weeks ago when Governor Brown signed new legislation in regards to the state-wide marijuana industry.

This new legislation affects more than just who can work in a dispensary, or more than rules regarding marijuana payment processing systems. This new rule brings forth licensure both – state and city – for dispensaries. The problem is that Los Angeles does not offer city-wide dispensary licensing. Oddly enough, thanks to the citizens voting for Proposition D in 2013, dispensaries are not legal in Los Angeles. These dispensaries only have “limited immunity… from prosecution” according to Prop. D. There are currently 1,500 or so dispensaries in the city of Los Angeles, and they are all at risk of closing.

So, what do you do if you are a marijuana merchant in Los Angeles? First off, don’t panic. Yes, it seems natural to panic. You’re operating a business that isn’t 100% legal on a city-wide level, and you may be afraid of what will happen. Well, thankfully, there is a state-wide legality for marijuana dispensaries. These new laws are a good thing, and they help better regulate the medical marijuana industry. Without these state-wide bills, local ordinances can make their own rules and regulations as they please. These new rules create a Bureau of Medical Marijuana Regulations (sounds fancy, doesn’t it), and it will be operated under California’s Department of Consumer affairs. This helps better regulate the businesses – and gives consumers a place to formally complain if something goes wrong. It also helps further legitimize the often-controversial medical marijuana industry.

Typically, the biggest issues medical marijuana merchants have is locating a marijuana payment processor. However, Los Angeles dispensaries now have to worry about new state-wide regulations. The best thing that existing dispensaries can do is rely on the state laws, which look to protect both dispensaries and consumers.

Let us help you with Marijuana Payment Processing today!

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The Benefits of Check Processing for MMJ Delivery Service Companies

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Banking Check holded by hand on a white background

With the growing acceptance and popularity of medical marijuana, there is a legitimate need for merchant account services and credit card processing. This need is even greater for marijuana delivery startups. The manner in which this type of business operates calls for a form of safe payment processing.

Medical marijuana dispensaries are often placed in the following situation. They dispense their marijuana or cannabis legally prescribed by a certified doctor to patients. The majority of these patients want to pay via debit or credit card, but the company is only able to accept cash. The company has run into the problem of being able to have more payment processing options.

Banks are unwilling to offer their services to medical marijuana companies because marijuana is still listed as a Schedule I substance and is therefore illegal on the federal level. With the medical marijuana industry on the rise, dispensary owners are still in need of a large-scale option to satisfy their processing needs. This is especially true for businesses in the medical marijuana delivery service.

Eaze, for example, is a new medical marijuana delivery service app. Once a user has proven that they have a medical marijuana recommendation, the user can have his or her medical marijuana card approved and place an order. Eaze then contacts a dispensary and an independent driver is dispatched to deliver the marijuana. The deliver is made within 15 minutes or less. Since the transaction is taking place via an app, the ability to process different payment types is crucial to the success of this delivery service.

Medical marijuana businesses are increasingly looking to high risk merchant account providers for their processing needs. Through a high risk provider, it is possible to secure services like ACH check processing. iCheck, for example, is ideal for many sales environments. All check types can be accepted at the Point of Sale or when the consumer is not physically present.

Some of iCheck features include an iPhone app which allows the user to take a photo of a check from any location from an iPhone or iPad. In addition, the creation of “Pay Now” buttons is made quick and easy. These buttons can be added to any spot on a business’ website. iCheck also allows for email invoicing and billpay. Invoices can be paid by email and digitally signed, and funds can be sent directly from your bank account to any recipient in the U.S.

Even with regulation issues, the medical marijuana industry continues to grow. Check processing solutions is just one of the ways payment processing is evolving with the industry. The best solution so far for medical marijuana businesses is to work with a high-risk merchant processor like MMA. A much better option, especially for businesses that offer delivery services where cash is not always an option.

For check processing solutions contact us today!

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MMJ Delivery Service Companies Face New Tax Issues in California

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ACH Marijuana Check ProcessingA new issue has recently come up for the California medical marijuana industry concerning delivery services. The dispensaries that use delivery services to transport cannabis to patients may face a new challenge on the tax front if they fail to use caution.

According to Jerome E. Horton, chairman of the state’s Board of Equalization, MMJ delivery fees are taxable in some cases. On the other hand, businesses could pay more in taxes than they owe if they do not realize that those particular delivery fees are not taxable. While the sales of cannabis are generally taxable under California law, delivery fees are not as long as certain conditions have been met.

For example, a dispensary must list the delivery fee separately on their invoice; this ensures that it can be independently verified. In addition, a third-party must be responsible for handling the delivery. The charge incurred cannot be more than what the dispensary actually paid the delivery service for the handling of that transaction.

If this is not documented and these conditions are not met, tax will apply to the seller’s entire delivery charge if it is made in connection with a taxable sale of cannabis products. In the event that this does occur – the fee exceeds the cost of the service to the dispensary – the difference between the price charged and the expense will be taxable.

Board of Equalization (BOE) Chairman Jerome E. Horton reveals that “As a seller of cannabis products, you must report your total sales on your sales and use tax return. If your total sales include nontaxable delivery charges, you should take a deduction for those amounts on the line for ‘Other’ deductions. If you don’t take the deduction, you’ll pay more tax than you owe”.

With investors warming to cannabis, many entrepreneurs are seeing dollar signs, and not just in the sale of cannabis itself. Eaze, a technology company that helps facilitate medical marijuana deliveries to patients, has raised $10 million in venture capital funding. This funding will allow the company to expand geographically while also improving its customer service.

Patients simply use their medical marijuana cards on the company’s websites, enter the strain, and the amount they wish to purchase. Eaze then contacts a dispensary, an independent driver is dispatched to deliver the marijuana and the delivery is made in 15 minutes or less. All of this occurs without Eaze ever physically coming into contact with the marijuana.

The creators of Eaze are not the only ones who have seen the possibilities in these types of services. Many entrepreneurs and investors are seeing the possibilities, but run into problems when trying to secure payment processing. Traditional banks are turning the medical cannabis industry away. And it goes without saying that cash is not a safe option.

Medical marijuana payment processing allows both retail and delivery dispensaries payment processing solutions. Patients will be able to pay with their credit card, debit card or savings account. With questions over regulations and taxes still popping up, medical marijuana payment processing offers a safe option for processing needs.

Contact us for ACH Check Processing solutions for your MMJ business.

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MMJ Businesses Seek Payment Solutions Elsewhere after KC Fed’s Denial

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Cannabis leaf scattered on the dollars. Seamless imageThe marijuana industry continues to experience one setback after another. This summer has been no exception. At the beginning of August, it was reported that the Federal Reserve Bank of Kansas City was caught in the middle of a heated debate concerning the legalization of marijuana. It became a target of a lawsuit filed by a credit union that is seeking to serve the marijuana industry.

The Fourth Corner Credit Union is a state-charted credit union founded in Colorado in 2014. The lawsuit was filed in federal court by the credit union after the Kansas City Fed denied the credit union a nine-digit routing transit number that would allow it to create its master account. The Federal Reserve’s argument is that, in denying the credit union’s application, there is no way to properly identify the risk posed by the financial institution or how to manage that risk.

The CEO of Fourth Corner, Diedra O’Gorman, expressed that the Kansas City Fed is unreasonably restraining trade and commerce. Her argument is that, since the credit union received a state charter, federal law requires that access to Federal Reserve payment systems must be granted.

In addition to the initial lawsuit, the credit union also filed a separate suit against the National Credit Union Administration’s Office of Consumer Protection. Ultimately, the office denied the credit union access to the federal insurance program that protects depositors. Another road block, the credit union’s charter was approved on the condition that it gets federal insurance.

Federal banking regulators have taken a hard-line stance against providing banking to the marijuana industry due to the federal prohibition of the drug. As far as federal law goes, marijuana is still classified as a Schedule I substance along with heroin, LSD and peyote.

As a result, state-licensed marijuana businesses are forced to operate in a cash-only manner. This makes tax collection in states where marijuana is legal difficult, and obviously creates serious security problems for the businesses themselves. With little to no help from traditional financial sources, marijuana businesses are turning to the marijuana payment solutions many high risk providers offer.

With little to no change on the horizon at the federal level and debates raging at the state level, marijuana payment solutions of this sort seem to be the best and safest option. Businesses are able to secure their payment processing needs while steering clear of cash only operations. In the meantime, many are waiting to see the outcome of the Kansas City Fed lawsuit and its impact on the marijuana industry’s future.

For Marijuana payment Solutions contact us today!

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Marijuana Payment Processing; Best Option after Banking Setbacks

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imrsAs a whole, the industry has experienced a handful of high-profile banking setbacks this year. Industry and banking experts are calling for real changes if things are going to improve on the federal level for the marijuana industry.

In July, the U.S. Federal Reserve Bank of Kansas City denied a Colorado credit union a master account. This account would have allowed The Fourth Corner Credit Union the ability to conduct electronic transactions, process checks and credit and debit cards. The credit union filed a lawsuit in federal court that challenged the decision, saying that it wants “equal access” to the financial system.

Nevada and California have also made moves towards bringing banking services to the industry. Nevada is pushing to create marijuana focused “thrifts”. An amendment to a bill is currently before the Nevada governor that could potentially change the rules so savings and loan companies – “thrifts” – wouldn’t have to obtain insurance from the Federal Deposit Insurance Corporation (FDIC). Thrifts have the potential to become the go-to financial institution for cannabis companies.

Likewise, the California Tax Board is proposing the creation of a state-run bank where cannabis companies would be able to easily deposit their money. For businesses that have been forced to operate in cash only, it would be a much safer and practical option. However, the board has yet to officially write out a plan.

Many feel that the real issue is that marijuana is still classified as a Schedule I substance, making marijuana very much illegal on the federal level. This classification has left banks in a difficult position between state and federal law. Two financial institutions that were going to be big players in cannabis banking reversed course earlier this year. In addition, the First Security Bank of Nevada announced in May that it would no longer accept deposits from the sale of marijuana.

“The only true solution is a change in federal law,” said Jenifer Waller, the senior vice president of the Colorado Bankers Association. “That’s the only way to fix it. It’s still the illegal nature of the activity, and that’s what no financial institution can get over.”

Banks and marijuana businesses are not the only ones who are hoping for changes at the federal level. The agencies in charge of ensuring money derived from cannabis sales is also frustrated with the situation. In keeping money from well-regulated banks, it also prevents the regulation of where that money came from, how it is being used and where it is going.

In the words of Matthew L. Schwartz, a partner with a New York-based law firm that works with cannabis companies, “Right now, if you’re a law enforcement officer and you want to follow the money, that’s difficult to do with an all-cash business”.

Not only is it difficult for marijuana businesses to be transparent without a way to deposit their money, operating in cash only is inconvenient and unsafe. Thankfully, marijuana payment processing has provided a safe and hassle-free option for businesses. The services provided by a marijuana merchant account are tailored to the needs of the marijuana industry. As businesses secure other means of payment processing, the industry as a whole is waiting to see what happens at the federal level.

Contact us for Marijuana Payment Processing today!

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Marijuana Business Funding – California Businesses Await Statewide Regulations

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Marijuana Business FundingMedical marijuana is not new to the state of California. Although California was the first state to legalize medical cannabis in 1996, it never managed to establish statewide regulations on the medical cannabis industry. As a result, a mishmash of local rules were put into place that vary depending on the municipality or county.

The lack of regulations has led to a lot of uncertainty for businesses. On top of the general confusion in the market, there is also a continuous fluctuation of companies. Companies start up only to be shut down by anti-cannabis officials. This confusion and inconsistency in regulations is a statewide problem. If a regulatory scheme could be adopted statewide, it would help to stabilize the country’s largest MMJ industry.

At the beginning of September, it was announced that California was just days away from approving statewide regulations on its enormous medical cannabis industry. With the legislative session set to adjourn on Sept. 11, lawmakers and stakeholders are under a lot of pressure to work through negotiations and strike an agreement.

The key to reaching a solution will be appeasing all of the stakeholders, which includes industry leaders, law enforcement representatives and healthcare officials. All while conforming to new proposed bill language released by Gov. Jerry Brown’s office.

According to Sean Donahoe, an industry political consultant, “What’s been happening for at least the last two years is we’ve been trying to smoke out the governor – pun intended – as to what his preferred regulatory approach might be”.

While the governor’s bill language is likely to undergo further revisions, there have been hints as to what the bill might include. According to various sources and the East Bay Express’s review of Brown’s draft:

  • There would be a dozen state business licenses to choose from for businesses in the industry including: cultivator, dispensary, manufacturer, testing lab, and more.
  • Companies would be limited to two licenses each. A single company would not be allowed to grow, dispense and manufacture other goods, such as edibles. (However, there would more than likely be exemptions for the two-license cap for existing businesses that are currently conforming to separate local mandates).
  • Organic certifications would be put into place, and testing would more than likely be implemented and required.
  • Local governments could still possess the ability to ban commercial marijuana activity if it so desired.
  • Growing would be limited to one acre, or 20,000 square feet (the paper did not specify whether or not this would apply to outdoor or indoor grows).
  • There could be requirements that medical cannabis must be sold in the geographic region in which it was grown.

While the next steps involved are unclear, the specific regulations will be left to rulemaking under the authority of one or more state agencies. The governor reportedly preferred to choose a bigger picture regulatory bill while leaving the majority of the details to administrators. While the governor’s bill will more than likely undergo further revisions, many are optimistic in the progress that is being made.

In the words of one staffer, “This is the farthest any of the cannabis bills have come in the past few years, ever”.

The issue of regulation is obviously a big obstacle for businesses to overcome. Finding business funding is even more so. Many businesses have turned to marijuana business funding from high risk merchant account providers. Since business funding is not a loan, the application process is simple. Basic documentation is required, and the acceptance time is quick – sometimes in as little as 5-7 days. This has made marijuana business funding an attractive option as businesses wait for regulation issues to be addressed and decisions to be made.

Contact MMA for Marijuana Business Funding today!

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Lessons from the Business Executive – Marijuana Business Funding

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MarijuanaThere’s a reason why people like to say “been there, done that”. Someone who has learned how to handle a situation, or a business, has done so with a lot of trial and error. Yes, some things were figured out easily. But a lot of things in life, and in business, are learned the hard way. For those who have experienced success in the marijuana industry, there is no exception.

Thoroughly understand the concept of margins and gross margins

If you sell $100,000 worth of products and your cost for those products is $65,000, your gross profit is $35,000. Your gross profit margin is 35 percent. Thus, to find your gross profit, you subtract inventory costs from sales.

When making purchases for your store, you need to consider the cost of those products along with gross margins. In order to make wise purchases, you must consider approximately what margins you need to make based on your sales and expenses. In balancing your inventory with a combination of higher and lower margin products, you can achieve some flexibility.

Keep in mind that lower margin products can sometimes bring prestige to your store. Highly valued and sought after strains of cannabis also means that growers will charge more for pounds. In order to offset these lower margin products, a business can buy some less expensive, higher margin product.

Obtain and Maintain the Right Inventory

One of the most important aspects of successfully running a marijuana dispensary is having the right inventory; this also involves choosing the right inventory manager. They must be a real weed “geek” in that they can recognize strains and subpar trim jobs. Years of experience and a passion for the job are involved in acquiring such a skill set.

A good inventory manager must also know the market. What strains are currently the most sought-after? What new products are up and coming?

The optimal inventory will change from state to state, area to area, and shop to shop. Whether the inventory is recreational or medical based will matter as well. One fact is true across the board – the right mix of flower, concentrates and edibles is essential.

Overcome the banking challenges of the industry

Banking has and continues to be one of the biggest challenges for the marijuana industry. Although the acceptance of cannabis has come a long way, it is still illegal on the federal level. As a result, banks tend to turn and run the other way.

If you find a bank in your state willing to work with you, jump on the opportunity. For the majority of businesses however, this is not the case. It goes without saying that operating in cash is simply inconvenient and incredibly unsafe.

To find solutions tailored to the industry and to avoid operating in cash only, businesses are turning to high risk providers for their marijuana business funding needs. High risk processors specialize in working with industries considered high risk. Their application processes are also simple, fast and hassle-free. Basic documentation is required, unlike the endless red tape you will likely experience with traditional institutions.

Take advantage of the information from those who have “been there, done that”. Maintaining the right inventory, watching your margins and securing business funding will strengthen your business. Don’t let mediocre inventory and banking challenges hold you back.

Contact us for Marijuana Business Funding Today!

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