Will Increase in Competition Crash the Cannabis Industry in Colorado?

Posted on March 24, 2015 by admin

Recent changes to Colorado’s recreational marijuana market has created a boom in the industry, but has left some afraid of over-saturation. Last October, the state ended its vertical integration rule and opened the market up to new entrants. Although the move has spawned a plethora of new businesses, it has also started conversations of impending price collapse and a fear that merchants will turn to the black market to reap lost profits.

Many growers believe the influx of new entrants will lead to a price collapse in the coming months as stand-alone growers increase competition and flood the wholesale market. On January 1, 2014, only medical marijuana facilities were granted Colorado permits, but last summer the state opened up the application process to businesses who were previously ineligible. This ended a crucial requirement that recreational shops grow at least 70% of the marijuana they sell.

Since the change, the number of recreational licenses in Colorado has jumped by 35% (870 licensed businesses). With this much added competition, fears of price declines may be well founded. According to Cannabase, an online marketplace that pairs growers with retailers, the price of recreational marijuana plummeted $600 per pound between September and December of 2014, while supply jumped at the same time. Cannabase CEO, Jennifer Beck, adds that the margins are now being squeezed in the state which could lead to a price crash.

Michael Elliot, the executive director of the Marijuana Industry Group, is concerned that the price drop could lead to desperate cultivators to turning to the black market to get better prices. If this happens, it would be a violation of one of the core eight principles defined by the Department of Justice. This would jeopardize the issuing of new licenses throughout the state.

Still, increased competition is good news for some in the industry. Businesses that deal in edibles now have more to choose from as more and more types of cannabis flood the market.

Despite the success of the cannabis businesses in Colorado, many merchants still find it difficult to secure competent recreational or medical marijuana payment processing from traditional payment processors. Luckily, there are some experienced online payment processors that specialize in fast and comprehensive marijuana payment processing.

Learn more about expanding your customer’s payment options with credit and debit cards by contacting us today!

Legalization of Marijuana Creates New Economy in Denver

Posted on March 24, 2015 by admin

Since the legalization of recreational marijuana in Denver in 2014, the city has created a profitable industry where individuals and businesses can thrive. Now the city officially has more marijuana dispensaries than Starbucks, making it the place to be for new marijuana entrepreneurs. Although the city has been in the center of heated debates and punchlines, marijuana’s effects on the economy are no laughing matter.

Since its legalization, marijuana has created a large job market and increased tax revenue, to the tune of $44 million. Now smart entrepreneurs are rushing to the state to grow and sell their own special strands of marijuana. Companies are popping up left and right, dealing with all aspects of the marijuana trade. Many are creating marijuana-infused products, like sodas, lotions, cookies, and other edibles.

Once marijuana was legalized in Denver, many residents were concerned that it would lead to an increase in drug related accidents, drug related crimes, and drug use in children. Thus far, these fears have not come to pass. According to a Denver Post poll, crime rates have remained stable in the city, while its car fatalities and murder rate decreased in 2014. Also there has yet to be any definitive proof that legalization has increased the use of marijuana for people under 21 years of age.

Jack Strauss of the University of Denver, recently conducted a study on the economic impact of two of Denver’s major marijuana dispensaries, Colorado Harvest Company and Evergreen Apothecary. Strauss found that the combined economic impact of both stores was seven times the impact of the average restaurant or retail store in the metro area. Tax revenue from both totaled over $1.07 million for Colorado and over $390,000 for the city.

Despite the embracing of marijuana businesses in Colorado, many marijuana merchants still find it difficult to secure competent recreational or medical marijuana payment processing from traditional lenders. However, there are some experienced online payment processors that specialize in this area.

Learn more about expanding your customer’s payment options with credit and debit cards. Contact us today!

Colorado Revenue Report Shows Growth in Recreational Marijuana Market

Posted on March 24, 2015 by admin

The Colorado Department of Revenue released its annual report on the nation’s first market for recreational marijuana products. Alongside Washington, Colorado was the first state in the US to legalize recreational marijuana. Of course, the discrepancy between state and Federal laws still create difficulties for merchants, but the market is growing at an impressive rate. According to numbers from the report, almost 150,000 pounds of cannabis flowers were sold last year. An indication of a healthy and growing market.

During the 2014 year, the number of licensed businesses for recreational marijuana doubled from 400 to over 800. Of course, the term ‘businesses’ in this context is comprehensive of retailers, cultivators, testing laboratories, and infused product manufacturers. The healthy market is growing competition at a healthy rate as merchants continue to capitalize on this in-demand market. The number of medical marijuana dispensaries also increased, though at a much smaller rate.

However, despite the increase of businesses receiving licenses, the medical marijuana market still vastly out reaches that of the recreational market in the state of Colorado. Of the nearly 150,000 pounds, approximately 100,000 still belonged to the medical marijuana market constituting two thirds of the entire supply within the state. The disparity comes from the established nature of the medical market compared to the state’s brand new recreational industry, pioneering not only the state but the nation as a whole. The disparity isn’t helped by the disparity between state and Federal laws either.

Due to marijuana still being banned by the Federal government, the industry remains high risk for merchants. Finding a bank to accept and handle a merchant’s marijuana payment processing remains next-to-impossible. This forces many merchants to find payment processing to avoid being a cash-only business in alternative places that do not balk at the legal risks associated with the industry. As long as the difference exists between state and Federal law, merchants will always be under threat of overzealous Federal prosecution, and therefore banks and traditional financial institutions will back away from providing payment processing for credit and debit transactions.

Colorado is more than an experiment for the functionality of recreational marijuana markets. The growth and success of the Colorado markets indicate that the market may be here to stay. As merchants find more alternatives to the complications and difficulties of doing business, businesses will continue to grow as the recreational marijuana industry continues to develop past its infant stages.

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Colorado’s Pot Industry Moving to Change the Face of the Industry

Posted on December 19, 2014 by admin

As the first anniversary of the legalization of recreational marijuana in Colorado approaches, those involved are making it a priority to change the face of the industry. The push is for the “stoner culture” stereotype to be removed and for the industry to gain a new meaning. The dream is for the industry to be recognized as a true business with true business people that are hard at working operating these companies.

For example, former commercial banker, Brooke Gehring, now operates two different businesses: Patient’s Choice of Colorado and Live Green Cannabis. $3 million later, she converted a furniture warehouse into a grow house. With 5,000 plants, Gehring expects to reach $10 million in sales this year.

It may come as a surprise, but Gehring’s grow house is situated across the street from a police station. She says that it serves as a security measure. At the same time, you can’t help but notice the symbolism of the industry wanting a chance to be viewed as an honest and upfront business.

With the exciting movement for the industry going from the “new kid” to “experienced businessman” comes some legitimate concerns. In order for the industry to continue on this respectable, honourable path and to thrive, regulations must be set and followed religiously. The thought that the federal government could come in and shut things down at any time has motivated those on Colorado’s state advisory panel to carefully write regulations.

The biggest concern of all is that people who do not manage their business will overproduce, have nowhere to sell it and turn to the outside, unregulated market for buyers. According to a report by NPR, it was confirmed that the Mexican cartels are buying Colorado pot and bringing it into Mexico.

For now, Colorado is moving to put regulations in place that will help the industry grow in a healthy way. The biggest issues at present are the competition with the black market and the need for the federal government to jump on board with legalization.

Can you relate to the industry’s need to grow and be recognized? With high risk still being an issue for the industry, marijuana merchant accounts are still the best option for those looking to enter the business. Let a marijuana merchant account provide you with a safe and efficient means to operating your business.

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Recreational Marijuana Sells Grow Massively

Posted on October 8, 2014 by admin

In Colorado, recreational marijuana sells have skyrocketed. In fact, consumers spent more on recreational marijuana than medicinal marijuana. This lends credibility to its legalization. With its lucrative outcome, it is possible that other states may soon hop on the legalized recreational marijuana bandwagon.

Colorado legalized small amounts of recreational marijuana earlier in 2014, and soon sales were booming. These sales not only helped those wanting the product, but it also helped create jobs in the community, and tax dollars. Of course, legalized marijuana is taxed, and those tax dollars help with everything from infrastructure to roads. While only time will tell if this is a “fad” or I the sales will stay high, for the time being the extra jobs and tax dollars are something that many other states are looking at seriously.

Even if your state is not embracing legalized recreational marijuana, they may be one of the states that offers up legalized medicinal marijuana. If so, you should seriously consider offering it in your business. It is still a lucrative product, and a much wanted product. However, you need to be sure that you have a medicinal marijuana payment processor. Mainstream payment processors tend to drop merchants who offer medicinal marijuana, because they are subject to higher percentages of fraudulent activity.

We know the benefits that medicinal marijuana can offer to customers, as well as the lucrative benefits it can offer to merchants. We pride ourselves at providing our merchants industry-standard processing rates, as well as top of the line security, software, and terminals. We keep your information, as well as your customers’ information secure, which is a major concern these days. Whether you are about to add legalized medicinal marijuana to your inventory, or if you are just curious,

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Denver Marijuana Stores Create Massive Economic Impact

Posted on October 1, 2014 by admin

Many doubted the economic impact of legalized marijuana, but two cannabis retailers in Denver, Colorado have convinced them. The two retailers, Evergreen Apothecary and Colorado Harvest Company, have contributed around 280 jobs, and over 30 million in local economic impact. This does not include the nearly $200,000 they will pay in state business taxes. The impact comes in many forms, from their paying their workers, to the workers spending their money in the area, and even tourists who would otherwise not come to the area, spending their money in hotels, restaurants, and other retailers. Overall, the legalization of marijuana is good for the economy.

This is great, and you can help out, as well. If you are in the Denver area, or live in another locale that offers legalized recreational marijuana, why not invest in a business? It doesn’t have to be a large business to make an impact. It is rather easy to open and operate a marijuana retail store, and aside from city and state paperwork (and the product) there is only one other thing you need: A marijuana merchant account. It may seem like a task to find one, but one is actually closer than you can imagine.

Marijuana Merchant Account is the premier medical and legalized recreational marijuana merchant account provider in the United States. We know the stress you could be under as a medical marijuana merchant, and we will not abandon you if something goes wrong with your business. We know that you may incur a fraudulent charge, and we will help you determine if it is indeed fraudulent. Our merchants are offered the best security, software, and terminals, to help combat data theft. Our rates are industry-standard, and we do not trump them up just because you operate what some consider a “fad” business.

For more information about obtaining a medical marijuana merchant account, contact us today by clicking below!

The Cannabis Industry’s Struggle to Acquire Payment Services Continues

Posted on May 20, 2014 by admin

Things are still at a very difficult point for the marijuana industry due to conflict between state and federal laws. The state of Colorado was the first state to legalize (in 2012) the sale and use of small amounts of marijuana for recreational purposes. However, the battle with the payment industry and banks still continues. The fact still remains that marijuana is illegal under federal law.

According to Jim Daly’s article for Digital Transactions, “the federal Drug Enforcement Administration considers marijuana a so-called Schedule 1 drug, right up there with heroin, LSD, Ecstasy, and other hard drugs ‘with no currently accepted medical use and a high potential for abuse,’ according to the DEA Web site.”

The industry is now fighting to be able to obtain payment card merchant accounts for its businesses. The present cash-only nature of the industry not only makes it at risk to crime, but it is also very impractical and difficult for the business owners to deal with. Banks refuse to do work with business owners if they inform them upfront of the nature of their business. In addition, when a personal credit card was the only option, it has been known for banks to cancel the card after becoming suspicious about the owner’s transactions. With banks refusing to provide payment card merchant accounts and keeping a strict eye on the transactions of business owners in the industry, operating in cash is still the only option.

To put it in the words of Daly’s interviewee, Rod Hurlbut, “’It’s a nightmare,’ says the 58-year-old former accountant and real-estate developer. ‘It’s not a good thing. It’s absolutely a nightmare.’”

In an effort to try to compromise, Deputy Attorney General James M. Cole issued a memo on August 29th to federal prosecutors. This memo directs the prosecutors to refrain from enforcing the marijuana provisions of the CSA in the states where cannabis is legal. This refrainment will stand as long as the states conform to eight priorities which he then outlined.

According to Digital Transaction’s article, “They included preventing the distribution of pot to minors, preventing marijuana revenues from going to gangs and cartels, preventing the diversion of marijuana from states where it is legal to those where it is still banned, and other provisions.”

So far, there really have not been many changes for the cannabis industry. The early months of 2014 saw the ban by payment card networks in signing illegal merchants as card acceptors. Visa Inc., however, did issue a statement leaving the signing of new pot shops up to the discretion of its acquirers.

According to Digital Transactions, Visa Inc. made this statement in regards to its decision, “In this instance, the federal government considers the sale of marijuana illegal, but has announced that it will not challenge state laws that legalize and regulate marijuana sales. Given the federal government’s position and recognizing this is an evolving legal matter with different standards applicable in different states, our local merchant acquirers are best suited to make any determination about potential illegality.”

For now, business owners will have to operate in the awkward position between state and federal law. Until a more practical solution can be found and they are able to obtain payment card processing services, they will have to deal with handling the overwhelming amounts of cash they receive in weekly sales. Regardless of the state laws, the CSA still prohibits banks-and everyone else-from dealing with controlled substances or any proceeds that come from them.

According to a statement made by the association’s president and chief executive, Don A. Childears, “I believe there is nothing the executive branch can do to change this. The resolution of this requires, literally, an act of Congress, which isn’t likely in the near future.”

420 Day in Colorado!

Posted on April 30, 2014 by admin

Well it looks as though Colorado passed yet another vitally important cannabis test last weekend, and yes it just happened to be on target with Colorado’s new recreational marijuana industry.

With Colorado being the first state to legalize recreational marijuana it appears that their annual holiday held on 4/20 went well. Although there were long lines for the Cannabis Cup (which led to a few grumbles) did not led to any real bad behavior among the recreational cannabis consumers that were gathered for the rally in downtown and at other events that were held to celebrate the holiday.

The weekend of 4/20 was everything that the cannabis business had waited for and the cannabis consumers were very relaxed.

The holiday event of course turned out to be very profitable and the Cannabis commerce flowed free. Many recreational marijuana businesses had record sales; which means there was a surge in tax revenue for the state of Colorado.

This was great Public Relations for Colorado’s recreational cannabis industry since cannabis received bad PR in the beginning stages when there were several incidents involving edibles.

There are some individuals who are still against having tens of thousands of stoners gathering at one time, and smoking marijuana freely in public places although authorities did have to issue several thousand citations at the holiday event for public consumption, and some individuals were even taken to detox. Many say this is no different than alcohol-related events. There have always been those who don’t know their limit.

The message the folks of Colorado wants the rest of the world to see is: legalizing marijuana will not create a world of chaos, this is not any different than allowing individuals to drink in a bar/restaurant, or any alcohol-related event and that recreational cannabis users will not gather in large groups to consume marijuana.

Organizers of the rally downtown had a more professional event which brought a more professional side to the event. There were long lines for the vendor booths that sold Leafly and the manufacture CannaEnergy and some of the businesses handed out samples of their products. The atmosphere was very laid back.

Since the recreational cannabis industry is under the microscope due to the side effect of consuming marijuana through candy, cookies, and other means it has caused a black mark on the marijuana businesses as well as the legalization.

Horrible incidents that involve edibles need to be looked at as isolated incidents and they are not directly related to proper cannabis use. There may be possible misuse of the product (this is no different than taking too much of a prescription drug or alcohol poisoning). So the same measures you would take with medicine and alcohol you should also apply with the use of recreational cannabis.

Colorado and other states will need to address some of the issues that are tied to the edibles, and the responsible use of the cannabis users.

But 4/20 in Colorado will not only be marked as a holiday in Colorado. It will also go down on the history books as the first State to allow individuals to openly smoke, purchase, eat, and drink Cannabis in public.

Colorado’s Recreational Marijuana Sales Bigger Than They Seem

Posted on April 15, 2014 by admin

According to recent tax data released by Colorado, recreational marijuana sales increased by five percent in February. Sales reached $15.1 million. While this figure is good it is lower than expected. Though February was a shorter month than January which skews the actual perception of how much sales have grown.

Sales were approximately $539,285 each day in the month of February. This, when compared with $464,516 in January, shows that there was actually an increase of around 15%. This would have created a total of $17 million in February vs. $14.4 million in January, if February wasn’t a shorter month. Making sales a few million higher.

As recreational sales rise steadily and are expected to continue to climb as the year progresses, medical marijuana hasn’t suffered as some previously feared. Sales for medical marijuana rose 12% in February reaching $35.2 million. These figures prove that the recreational market is not impacting the medical market revenues. With medical and recreational markets both growing steadily and not adversely affecting each other the industry stands to increase as the year goes on.

The state collects taxes and fees on both recreational and medical marijuana. In February the state collected $3.2 million in taxes and fees related to the marijuana industry. A percentage of that, $438,253 is connected to a 2.9% sales tax on recreational marijuana and $1.43 million is connected to a 10% sales tax on any retail cannabis transactions including ancillary products related to marijuana.

Also as the dispensaries see increases in their sales it will be important to streamline a marijuana payment processing method to better capture sales and assist customers. Currently cash is the only form of payment accepted in dispensaries though that may change soon with the advent of new applications and technology.

Despite the good figures state lawmakers are holding off on making plans for the funds. As the forecast of the tax revenues could be different than what the various offices initially predicted. Therefore until more information can create a more accurate forecast the finalizing of spending plans for the tax revenues are on hold. Especially as the revenue estimates, created by the governor’s office, that were presented to voters who approved the marijuana tax plan in Colorado haven’t yet been consistent with the official tax report.

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Marijuana Enforcement Division Grows with the Colorado Marijuana Industry

Posted on April 9, 2014 by admin

With Colorado’s recreational marijuana industry growing at such a rapid rate the regulatory bureau has had to step in and oversee operations. The growth is primarily due to the expected expansion of recreational as well as medical industries. Even though marijuana has been legalized in Colorado the state is still trying to regulate the drug and tie up some of the loose ends.

State officials have received notices of intent from 255 businesses which have plans to apply for a license after July, at which time the state will open up its recreational industry to businesses that were not originally medical marijuana businesses. The state agency overseeing Colorado’s experiment of marijuana legalization is adding enforcement agents, data analysis, along with undercover operatives. Officials believe these steps will make businesses more accountable.

Just a year ago, there was a state audit that criticized what was then the Medical Marijuana Enforcement Division for not being able to track who was growing or selling marijuana. Budgeting and management was bad and there was no definition of marijuana’s role.

Now that there is more solid funding from application and licensing fees the Medical Enforcement Division has a stronger financial footing. This is the agencies third director in the last four years but finally the medical marijuana license applications have been caught up to the applications submitted in mid-2010.

Some industries are still questioning if the agency is capable of handling the challenges, more new businesses, and enforcing the product testing. In 2012 the division had to close three field offices and lay off the staff after a moratorium on new business applications force it to stretch operating expenses budgeted for one year over two years.

The Marijuana Division currently has 30 employees and they would like to see that number increased to 55 hopefully by the end of the fiscal year, in June. With increased manpower they are hoping to open some other offices in Colorado Springs, Northern Colorado and the Grand Junction.

Part of the expansion has made way for the secret shopper program. This will make sure businesses are not selling to minors. This plan is called the “underage compliance program” it is similar to the programs that are used in the liquor industry. There will be consumers sent out to retail shops to try and purchase marijuana. Then the operatives will go to the medical dispensaries and try to purchase cannabis without an official MMJ card. Although Colorado has a smoke your marijuana and feel good attitude these are some questions that linger yet unsaid aloud.

It would appear Colorado has the resources to hire and fund a Marijuana Division for the recreational marijuana industry but what about other states?
Will people who use marijuana be able to travel from state to state or country to country with their marijuana?
Will there be a breathalyzer for someone stoned behind the wheel of a moving vehicle?
Will medical marijuana smokers be able to smoke during work hours?
What about the individuals who drink, smoke marijuana and drive?

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Tag Archives: Colorado Marijuana Industry

Will Increase in Competition Crash the Cannabis Industry in Colorado?

Legalization of Marijuana Creates New Economy in Denver

Colorado Revenue Report Shows Growth in Recreational Marijuana Market

Colorado’s Pot Industry Moving to Change the Face of the Industry

Recreational Marijuana Sells Grow Massively

Denver Marijuana Stores Create Massive Economic Impact

The Cannabis Industry’s Struggle to Acquire Payment Services Continues

420 Day in Colorado!

Colorado’s Recreational Marijuana Sales Bigger Than They Seem

Marijuana Enforcement Division Grows with the Colorado Marijuana Industry

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