Banks Remain Wary of Marijuana Businesses as Alternative Payment Processor Step In

Posted on July 24, 2015 by admin

Banks have historically been mostly unwilling to work with different state-legal marijuana dealings across the US. Their cageyness has been founded on the fear of being implicated as cash launderers. This has traditionally forced marijuana-related businesses to trade exclusively on a cash-only basis, which always comes with some risks. It puts both the venders’ as well as the buyers’ safety at risk of being subjected to burglars.

Following the government’s gesture towards a free marijuana economy, some banks in the US are now opening their doors to businesses related to marijuana across the nation. They have however shown considerable caution in their acceptance of these business dealings. They remain wary of the dealings. Some of them have conversely continued to shutter the accounts run by marijuana businesses that’s presenting the marijuana merchants with challenging medical Marijuana payment processing across the country.

As a result, it encourages auxiliary account service providers such as MMA to step in and offer payment processing services to Marijuana dealers.

Details from a New Report

A new report from the Treasury Department’s Financial Crimes Enforcement bureau obtained by Dynamic Securities Analytics, a financial regulatory analytics firm now presents information regarding the undercurrents of the marijuana-banks relations over the recent business period.

The reported data reveals that financial bodies in different US states have filed over 1,700 reports on marijuana-related businesses in compliance with the FinCEN guidance. The guidance present details to direct the activities of the banks as they deal with marijuana related businesses. According to the report, this is the number of businesses being offered traditional banking services.

The businesses are said to be in full compliance with federal guidance and their various state laws according to the banks.

The FinCEN guidance directs that banks working with state-legal marijuana traders must report their undertakings in a report termed “suspicious activity (SAR)”.

The SAR has three classifications namely ‘limited’, ‘priority’ and ‘termination’. If a bank files the ‘limited’ SAR, it means that they are working well with the businesses related to marijuana and the businesses have not shown any evidence of violation of state laws or federal guidance.

In the recent report, over half of the total number of SARs reported (3,157) were classified as ‘limited’. Nearly the same number of banks are also said to be filing the ‘termination’ report. This means that they are quitting services extended to the marijuana related businesses.

This is their way of maintaining compliance with federal rules on money laundering programs. A total of 313 SARs filed were of the “priority” classification. They are banks that believe the marijuana businesses they are working with may have been in violation of certain state laws or the federal guidance.

Contact MMA for Medical Marijuana Payment Processing Solutions Today!

Marijuana Dispensaries Slow to Accept Credit Cards despite Friendly Federal Policy

Posted on July 24, 2015 by admin

Marijuana in the US is a controversial commodity. It remains a Schedule I substance at the federal level implying that it is not legal to produce, distribute, or possess it. Yet, at the same time, the Obama administration has shown considerable evidence pointing to their will to allow the freedom of individual states to make their determinations on sales of marijuana.

The government through its Financial Crimes Enforcement Network has even encouraged banks to extend merchant services to traders of marijuana. Federal agents are forbidden from carrying out any raids on state-approved dispensaries of medical marijuana.

Marijuana is legal in nearly half of the states of the US, with four of them having flat-out legalized use of recreational marijuana. Yet the transactions on this product still take place almost entirely in cash. This method of operation is a major headache for the marijuana dispensaries.

The risk is increased for merchants and customers alike. Customers have to carry around large volumes of cash to the merchant’s location. And merchants have been forced to invest in bank-grade safes, security structures, and other anti-theft actions.

This reliance on cash for all of a business transactions has another burden to it. It increases operational costs for marijuana merchants. Even worse, it keeps reinforcing the perception that the business is not legitimate.

Blind to available card payment opportunities

This line of action is casting a blind eye to the currently available card payment opportunities. In the US, two of the main card networks have abided by the directive given by the government and have relaxed their policies.

Visa has confirmed that even though it intends to keep ensuring that its network is used per the federal regulation, it will extend its services to marijuana merchants. MasterCard too has toed the line.

The two card networks will allow the banks to make their individual decisions pertaining to the legality of marijuana merchants.

These, however, are not the only payment opportunities available to the marijuana dispensaries. MMA currently offers marijuana merchant account services without any legal restrictions.

These alternative payment processing opportunities come as a great relief to the marijuana industry since big banks have remained guarded in their move towards embracing a free marijuana economy.

Now it remains upon the marijuana merchants to take advantage of these available opportunities and free themselves of the risks associated with cash dealings in marijuana business.

For marijuana merchant account solutions contact MMA today!

Legal or Not, Big Banks Say No to Big Cash From Marijuana

Posted on June 17, 2015 by admin

After a long time of legal battles to have medical marijuana legalized in the US, the nation has finally given a green light to have this business recognized. This means heavy cash in the hands of the people. When you have such volumes of cash, what do you do with it? Take to the banks. Interestingly the America’s big banks don’t want this cash.

Merchants of both medical marijuana and the recreational cannabis have been contending with a serious predicament. They have had to conduct their businesses almost entirely in cash. The reason for this being the fact that it is exceedingly hard for them to open and operate bank accounts. They can thus not accept and deal in credit cards.

The US Treasury Department through its financial-crimes arm is trying to make it easier for marijuana merchants to deposit this young industry’s growing revenue. The latest count approximated this revenue at around 3 billion dollars every year. All of it is almost entirely in cash. As a way to effectively tap taxes out of this revenue base, the government intends to use the country’s major financial organizations. This way it could keep the cash out of the way of organized crime.

There is a problem with the targeted banks though. Even though the government feels that their strong compliance departments are strategic and could help track this money, most federal bank regulators have so far remained silent on the subject.

This has created uncertainties regarding what is likely to happen to banks should they accept this cannabis cash. The banking industry is therefore confused about what to do. On one hand there is quite a lot of prospect given the 23 free marijuana states together with the District of Columbia are flooded with hard cash awaiting banking services. On the other hand it is unclear what the regulators are holding up their sleeves.

Crucial decisions need to be made fast. Otherwise the marijuana merchants may have to consider only the alternative marijuana payment processing bodies to help them out with safeguarding the cash. In that case the government problem regarding taxation and how best to tap revenues from this industry remains unsolved.

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Category Archives: Marijuana Banking

Banks Remain Wary of Marijuana Businesses as Alternative Payment Processor Step In

Marijuana Dispensaries Slow to Accept Credit Cards despite Friendly Federal Policy

Legal or Not, Big Banks Say No to Big Cash From Marijuana

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