Cannabis Legalization Having Interesting Effects on the U.S.

Posted on June 11, 2014 by admin

MMJ BUSINESS AND BANKS

There is a perception that major banking institutions avoid payment processing for Marijuana merchants. This perception is false, however, as more banks are now revealing their dealings with marijuana merchants since the Obama administration released new guidelines on how financial institutions can legally do business with cannabis dealers. Recently the chief executive officer of a Nevada bank reported that they would do business with dispensaries that will be opening there.

John Sullivan, president and chief executive officer of First Security Bank of Nevada, told KNPR, “Frankly, I didn’t personally follow any of this until about two months ago… (but then) we began to get phone calls from attorneys, and they represented some very influential people in Las Vegas with a long history of being strong supporters of the city.” He continues, “These are not the sort of people that are in dark shadows or they’re coming in from somewhere else…these are local people who have spent their life here and they have an unblemished reputation in all ways.”

Sullivan admitted that he was skeptical at first of the growing cannabis banking trends, but after reviewing research on the industry and reading the recent banking guidelines set out by the federal government, he and the First Security Bank of Nevada board decided to proceed.

After looking at all of the facts, Sullivan noted, ““It became clear that the attitudes of the federal government – both the bank regulatory agencies as well as the Department of Justice – are quickly changing.”

First Security Bank of Nevada hopes to be able to start payment processing for Marijuana merchants soon. As the first bank in Nevada to openly admit to dealing with cannabis dealers, other banks contemplating doing business with marijuana merchants will be watching their interaction with the government carefully.

PITCHING POT

New government regulations have started a flood of applications from aspiring cannabis businesses into Nevada. As marijuana becomes legal in states throughout the nation, each one is left to decide how to process and grant licenses. In Clark County, Nevada, applicants will be required to organize a six minute pitch to the county commissioners and the public over a three day period. The commissioner board will then select 18 finalists and forward them to the state for final approval.

SEC WATCHING CANNABIS STOCKS

Cannabis stock trading is coming under scrutiny by the SEC as the industry is starting to boom. After temporarily suspending five cannabis-related stocks, the SEC warned investors about committing fraud within the sector. A year ago there were only a dozen publicly traded companies in the cannabis market, now there are more than 100.

Now the SEC is keeping a close watch on a sector that is used to coloring outside of the lines. With reports of shady investors, fudged financial numbers, and questionable business practices. Most marijuana merchants are frustrated by these practices. They note if the marijuana industry wants to be taken seriously, it must clean up its act.

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The Issues the Marijuana Merchant Industry Faces

Posted on March 28, 2014 by admin

Although medical marijuana has been legalized in 20 states along with the District of Columbia, the industry is far from reaching the finish line in clearing all of the obstacles in its path. In an effort to put their best foot forward, the delegation from the National Cannabis Industry Association arrived at Capitol Hill dressed in their very best, in hopes of proving to Washington that they are more worried about their businesses than social activism.

At this point, the industry has been placed in a very strange position. President Obama has given thumbs up for doing business with legal marijuana sellers; the intention here is to try to get the banks to open up to the marijuana industry. Despite this go ahead from the administration, banks are refusing to open their doors to the marijuana industry.

As a result, this has placed the industry in a position where it is legal in some states but still very much illegal on the federal level; this is why banks are leery of doing business. In, Marijuana Properties are having a Hard Time Finding Financing in Colorado, the issue banks have is revealed, “These rules require that banks continue to file reports on their interactions with marijuana businesses, and they must identify when transactions are questionable. Banks are leery that notes collateralized by property theoretically subject to federal drug-seizure laws are just too risky.”

Because of the risks involved, two of the largest banks in Colorado, Wells Fargo and FirstBank, have announced that they will not be offering services to the industry. So despite the green light from the administration, the marijuana industry has hit a brick wall in Colorado when it comes to finding financing. Since the industry’s access to banks is very limited thus far, much of the industry is forced to operate in cash.

In addition to having issues with financing, the industry has had to deal with issues in the tax code. When the delegation met with staff members on Capitol Hill, it was to appeal to changes to the tax code that prohibits the businesses from taking standard deductions for expenses. According to an article by Holly Yeager of The Washington Post, “Section 280E of the tax code, which prohibits companies involved in drug trafficking from deducting normal business expenses that other legal businesses can claim.”

While legal battles continue in some states and questions still arise at every corner, the industry is seeing some big-name investors trying to get their foot in the door – New York State assembly member, Steve Katz being one of them. In another blog post by Marijuana Merchant Account, Mainstream Investors Begin to see the Value of Legalized Marijuana, states that “The legalization of marijuana is a hot topic across the United States, and to see a state assembly member put his trust, and funds, into the ring is a big step forward.”

At this point, there are other states that are pushing for legalization. However, there are still many issues for the marijuana industry to overcome at both the state and federal level. For those involved, it must feel a little bit like one step forward, two steps back. For now, it is a game of wait-and-see where the industry goes from here.

U.S. Attorney General Gives the Green Light for Banks to Process Legalized Marijuana Money

Posted on February 12, 2014 by admin

The Obama administration will soon announce regulations to make it easier for banks to do business with legal marijuana sellers, Attorney General Eric Holder said Thursday. This is fantastic news for the many businesses that searching for a marijuana merchant account.

Holder did not specify whether the rules would apply only in the states that have broadly legalized marijuana, or also to states that have legalized it for medicinal use. In August 2013, the attorney general announced the Obama Administration would not seek to overturn the Colorado and Washington state measures. He said federal drug agents would continue to leave most drug law enforcement to local authorities and would focus on large drug operations, setting priorities that appeared to make it unlikely the feds would engage in aggressive enforcement in the states that have legalized pot.

The federal banking accommodation, being worked out jointly by the Justice and the Treasury departments, comes in the wake of decisions by voters in Colorado and Washington State to legalize the sale and possession of pot. The moves have created legal tensions, since marijuana remains illegal under federal law. One particular problem has been the refusal of banks and merchant account services to deal with legalized marijuana businesses out of fears they will be accused of violating money-laundering laws. This fear is now in the past. Even so, it can still be hard to find a marijuana merchant account provider, since these businesses are classified as “high risk”. This is not necessarily a shameful thing, and it is not something that the average customer will know about to judge. It simply means that your business is at a higher risk of failure in comparison to other businesses.

Many marijuana merchants will find that the majority of merchant account services that will accommodate their company have higher fees. While this seems to be the norm, with dedication and research you will find that there are companies that cater only to “high risk” merchants, and these processors tend to have more streamlined fees.

The legalized marijuana craze is a great way to break into the small business industry. Thanks to Attorney General Eric Holder’s statement that banks would not be penalized for accepting funds from these businesses, it is now easier to find business bank accounts, as well as merchant accounts. However, finding a marijuana merchant account service is still tricky, so be sure to research each company thoroughly before deciding.

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Tag Archives: Marijuana and Banks

Cannabis Legalization Having Interesting Effects on the U.S.

The Issues the Marijuana Merchant Industry Faces

U.S. Attorney General Gives the Green Light for Banks to Process Legalized Marijuana Money

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