US Treasury to Discuss Marijuana Dispensaries and Banking Practices

Posted on December 17, 2013 by admin

Basic business practices in a credit-dependent economy mandate the necessity for a merchant account. Opening a merchant account allows for your small business to accept credit and/or debit transactions. In an economy and society that’s increasingly cashless, this is a must-have for any business. For a marijuana dispensary merchant accounts can be exceptionally difficult to open. Banks will not grant applications and open merchant accounts for marijuana dispensaries for fear of prosecution by the federal government as complicit in money laundering.

The Department of Justice released a memo on August 13, 2013 which promised deference to state laws and regulations regarding marijuana dispensaries. Marijuana has been legalized recreationally in two states, Colorado and Washington, and is permissible for medicinal purposes in 18 other states and the District of Columbia. The marijuana industry is estimated as a 1.7 billion dollar industry; an industry that is highly lucrative for high-risk entrepreneurs.

The US Treasury will discuss with banks about federal plans regarding the DOJ’s new deference to state regularization. The federal government remains active prosecuting marijuana dispensaries that advertise to children, carry marijuana across state lines, are associated with criminal organizations, and other areas that pertain to marijuana’s federal status as a controlled substance. Yet, lawyers for the American Bankers Association maintain that, in reality, the status quo for banks refusing to open accounts for marijuana dispensaries will remain as it is at present.

For investors and entrepreneurs involved in the marijuana industry and dispensaries, the complications from banks and opening merchant accounts will remain for the short term. Until the US Treasury and Department of Justice solidify a firm stance on whether banks can be prosecuted for money laundering by handling proceeds from illegal activities, banks will not risk opening accounts for marijuana dispensaries. Dispensary owners will be forced to continue to pursue alternative means such as online merchant account brokerage companies that can offer the services they require.

55% Favor Marijuana Legalization in California

Posted on December 10, 2013 by admin

Marijuana Business Daily – December 5th, 2013

The majority of Californians now favor legalizing marijuana for the first time ever, according to a new Field Poll.

The survey, which includes responses from 1,002 registered Californian voters between Nov. 14 and Dec. 5, found that 55% now favor legalization.

Just 31% said they support strict enforcement of the current laws or the passing of tougher laws governing marijuana. Another 12% said they support the current ban on recreational cannabis but believe the government should ease penalties.

New York Revives Medical Marijuana Discussions

Posted on December 10, 2013 by admin

Marijuana Business Daily – December 5th, 2013

The New York State Assembly Health Committee has begun hearings on the benefits of medical marijuana, which could pave the way for legalization next year.

The first meeting – held Wednesday in Buffalo – included testimony from medical marijuana patients from Colorado. The hearings continue today, with more patients and advocates set to testify.

Mark Kleiman, pot’s go-to guy

Posted on December 10, 2013 by admin

Los Angeles Times – December 4th, 2013

Come New Year’s Day, in Washington state and Colorado, marijuana will be legit, courtesy of two ballot initiatives. How do you create a legal business out of an illegal one? After 13 years of Prohibition, the country at least had an earlier legal liquor market to refer to. That’s where Mark Kleiman comes in, the go-to expert on these matters. A UCLA professor of public policy and author and coauthor of books like “Marijuana Legalization,” he’s heard all the jokes about “hemperor” and “your serene high-ness.” He was consulted by Washington state’s liquor control board, which has to come up with the nuts and bolts for the new law and which asked him for, well, the straight dope.

Has your Marijuana Dispensary been discriminated against?

Posted on November 22, 2013 by admin

There is something that screams trouble when it comes to the stories of Marijuana and the dispensaries that process the payments. Mary Jane, as it has affectionately become known over the years, has made great headway into the headlines over the last few months. 17 of our 50 states now have legalized the medical form of the herb mostly for those suffering ailments that we don’t always understand. The herb has been made into paper, clothing, medicine and even a stomach ailment. Helping those that can’t eat to maintain a steady diet and calm their stomach.

If you have a medical marijuana merchant account and you got shut down, it was from Federal Fear that that was grown from. Not too long ago, the Department of Justice came after the herb growers and the dispensaries. They threatened the merchant account servicers, Visa, MasterCard, Discover and American Express with thoughts of loss and arrest if they were involved in any shape or form with marijuana accounts. Well who in their right mind is going to fight with that strategy? They have bigger guns and prosecutors that yell very loud.

As time has passed

Since then, new laws have come into effect and State and Federal Senators, among others, are changing the laws. They have backed off the dispensaries and allowed them to do some good rather than be fraught with evil and uncertainty.

Up front

For customers you have to be in the dispensary with a pin based system to purchase the product, and only a few of the merchant account servicers have come back out of the wood work. Much like the fairytales with the wicked witch, they are tiny rabbits shivering behind whatever they can find to stay safe. Do you blame them?

Specifically

In order to find the marijuana merchant account servicers you need to do a specific search for their services. They might even be a bit skittish, but they were brave enough to try and it’s that attempt at some normalcy that they are reaching for.

Since this is a high risk merchant account, your services may cost a little more than most, but under the circumstances, it is understandable. You will just have to adjust to the cost and pass it on. With the advance of debit and credit card processing, it can only make things a little easier than they were.

Here’s hoping

For those scared rabbits out there, the tunnel is slowly clearing. Dispensaries are coming out of the wood work to do business above ground again. They don’t want to have those large sums of cash on them and would prefer to have the ability to process the debit/credit card amounts over the wires. They want to be secure like everyone else in the merchant account servicer processing arena. So, everyone take a deep breath and try this again.

The Department of Justice has promised that if a dispensary is running within the law, they will be left alone. Let’s hope they get a chance to do that very thing.

How to finance your medical marijuana business

Posted on November 8, 2013 by admin

With more and more states emerging as potential cannabis markets, many entrepreneurs are now interested in starting their own medical marijuana business. As the industry is growing rapidly, many new small business owners who are looking to capitalize with the new market are asking the same key question, how much capital they need and how to finance their medical marijuana business?

According to a few estimates, you may need $15k to $100k to start a medical marijuana business application which will grant you the license to legally do so. Consultants and law firms are charging more and more money as more people become interested in getting a license and starting their own Marijuana business. This indicates that obtaining a license, setting up a website, getting a marijuana merchant account, a shop and going through documentation and legal complications may require a good amount of capital for starting.

So how can you raise funds to finance your medical marijuana business when the banking sector is turning more hostile towards medical marijuana industry due to legalities involved as medical marijuana is still illegal under federal law?

Options for funding your Medical Marijuana Business

Private Investors

With absence of the banking sector, private investors are a great source for funding your business, but it can come at a high cost. With no other alternates available, private investors are charging as high as 25% in interest rate. This rate is often not healthy for sustainable business especially for the medical marijuana industry that also has to pay unusual high federal taxes.

Angel Investing and Venture Capitalist

The other option to get funds is finding an angel investor. In this case, a rich doctor or a successful entrepreneur who agrees to invest in your business by sharing the equity of your business.

Finding a venture capitalist who can invest money in a promising business by sharing the profits is another option. This way, merchants can save the high interest rate, but they need to share the percentage of their business with their investors. The medical marijuana business is doing excellent in terms of profits and growth in states where it is legal, so finding a good angel or venture capitalist is not difficult if you know how to connect with them. A good option is to visit your local business chamber and connect with some of the angel organizations.

According to Adam Bierman, CEO of popular dispensary consulting firm, one pound of pharmaceutical grade marijuana costs $1000 to produce but it sells at $7,500 retail price. This indicates that the huge margin of profit in the medical marijuana industry can lure in big investors easily if you know how to sell your business plan. According to estimates, the $1.5 billion industry in 2013 will expand to $3.3 billion within next two years. With more than 100% promising growth in just next two years, investors are rushing in but you need to make sure that you are finding the right investor with affordable interest rates or favorable equity sharing.

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Category Archives: Marijuana Merchant Account

US Treasury to Discuss Marijuana Dispensaries and Banking Practices

55% Favor Marijuana Legalization in California

New York Revives Medical Marijuana Discussions

Mark Kleiman, pot’s go-to guy

Has your Marijuana Dispensary been discriminated against?

How to finance your medical marijuana business

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