Cannabis Cooperative Gives New Hope to the Industry

Posted on June 6, 2014 by admin

The creation of cannabis co-operatives by state lawmakers may never have a chance to get off of the ground. The state of Colorado recently approved a plan that is meant to help marijuana stores deal with the enormous cash sums they experience. In September 2011, the last bank in the state of Colorado closed its doors to working with medical marijuana businesses. This action forced businesses to operate in cash-only, which obviously leaves the owner in a very risky situation with no place to deposit their money.

According to an article on May 12^th by the National Cannabis Industry Association, “State lawmakers late Wednesday night approved a law giving marijuana-store owners the right to create cannabis co-operatives, which would operate like banks or credit unions. Gov. John Hickenlooper previously indicated he would sign a slightly different bill but has repeatedly called on federal lawmakers to change laws on the national level.”

The bill is being co-sponsored by Democrat Sen. Pat Steadman and Republican Rep. Tom Massey. Senate Bill 75, if passed, would allow medical marijuana businesses to create cooperatives that would be regulated similar to credit unions while also being insured by “non-federally backed” insurance policies. Brian Vicente, of marijuana advocacy group Sensible Colorado, informed The Huffington Post that “Colorado’s tightly regulated medical marijuana businesses need banking that allows them to operate like other state licensed businesses.”

Under the proposed bill, cannabis co-ops would be able to provide banking services like issuing checks and electronically transferring funds. However, this can only happen if permission is given at the Federal level. “Most everyone agrees that banking needs to be fixed at the federal level. However, Congress appears to be unwilling to act, and Coloradans don’t have time to wait,” said Mike Elliott of the pot lobby’s Marijuana Industry Group in a statement to Coloradoan. “(This law) is likely not a solution to the banking problem but an opportunity to move the conversation forward.”

Marijuana store owners are in support of the Colorado co-op bill, saying they are tired of playing games with the banks. Having accounts closed by banks and having to open accounts using benign names is not only stressful, but it also leaves the owners at risk to crimes since the public is well aware of the industry being forced to operate in cash-only.

Elan Nelson, spokeswoman for Denver-based marijuana store Medicine Man, revealed her opinion to the Coloradoan. “While the cannabis co-op law likely won’t directly lead to changes, it’s a place to start”. She also stated that “It will probably go nowhere, but we have to start having the conversation at the federal level.” For now, business owners will have to find safe payment processing options and merchant accounts that are safe for the high risk involved in the marijuana industry. marijuana-merchant-account.com, for example, provides merchant processing services to marijuana dispensaries.

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$9M in Startup Costs for Marijuana Dispensary

Posted on May 22, 2014 by admin

With the help of businessman Howard Kessler, owner of Financial Services Consulting Company from Boston, “New England Treatment Access” will open stores in Brookline and Northampton. A cultivation facility will open in Franklin this year with owners Kevin Fisher and Arnon Vered working very hard to keep all them going.

Ambition

Kevin and Arnon have received two of the 20 provisional dispensary licenses awarded by the State. Their ambitions are high and their projections show them jetting to nine point eight million dollars by 2015.

They assume each patient will pay $786.00 an ounce and with their projections of 1.6 ounces each month, it works out to $4800 for a pound. With the help of their medical marijuana account they will grow their revenues to $19 million dollars by 2017 and reach their peak patient count in 2016 with 3,200 people. (Don’t we all want $19 million by 2017?)

Their risk

Notably, they have jumped into a hostile business, not to mention it is just barely coming out of the stone ages of bureaucracy and banking issues to boot. They have market size issues to deal with, fluctuations in ill patients, insurance issues, and economy uncertainties.

Regardless, their prospectus is a winner. They have high value on their product and as low an overhead as they can manage. As long as they can see the consequences and prepare for them, they’ve got this in the bag.

Rock on

Gone are most of the days when Chech and Chong hung around to fill their truck up with weed smoke. Now, a strong business has come to light and professionals are stepping up to coordinate nice institutions for people to purchase the marijuana wears. Doctors are prescribing the herb for pain and stomach issues as well as full clothing lines and other items.

Who knows where Kevin Fisher and Arnon Vered will be by 2017, but at least they are willing to make a try for a business that they can perceive as profitable and worthy. Unlike what it used to bring to mind in the 70’s and every church fearing mother would hide her children. Now it has come full circle and out of the dark and into the light. It’s nice to see fear being driven away from something that shouldn’t be scary.

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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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.

Cannabis Production May Limit Inventories, Create Dispensary Shortages

Posted on March 19, 2014 by admin

Recreational marijuana dispensaries and growers in Washington State have concerns about the state’s cap on cannabis production. Washington State currently has allotted a 2 million square foot canopy cap for recreational cannabis. Yet, the recreational marijuana industry could face a demand that far exceeds the supply and production capability.

Colorado’s Precedent

January 2013 marked the first month of legal recreational marijuana in the state of Colorado. Dispensaries in Colorado struggled in the opening month of the new industry with many complications. Recreational marijuana businesses contended with long lines, inventory shortages, and price hikes.

Many dispensaries in Washington State believe that recreational marijuana revenue could exceed medical marijuana revenue by up to 300%. Business owners point to Colorado as an example. The RAND corporation estimated Washington State’s cannabis consumption at 175 metric tons in 2013. The cannabis consumption cap would place Washington’s marijuana production rate at roughly 1/4th the consumption rate. Tax-paying businesses may lose the opportunity to acquire transactions that exist on the black market.

Growers Uncertain

Washington State’s recreational marijuana growers remain uncertain about the cannabis cap. Growers can apply for up to three licenses at three different tiers. The most ambitious grower applying for three of the largest available licenses could avail of 90,000 square feet to grow cannabis. Yet the 2 million square foot cap would only allow for 22 growers of that caliber. With more than 2,600 grower’s license applications, growers are stuck in limbo about the reality of their business plans.

Conservative Lawmakers’ Cannabis Concerns

The number of applicants combined with a cap that restricts production far below estimated consumption create dire implications for the new industry. Lawmakers intended to ensure Washington State is not left with a surplus of Cannabis that cannot move over state lines.

Yet the lawmakers may be forfeiting the opportunity to bring marijuana transactions off the black market and into tax-paying dispensaries. If the supply and production is not capable of creating adequate inventories for dispensaries, the entire industry will be hamstrung before it can begin walking.

Marijuana Properties are having a Hard Time Finding Financing in Colorado

Posted on March 17, 2014 by admin

Two of Colorado’s largest banks, Wells Fargo and FirstBank, have announced that they will not offer any new loans to those whose properties are hosting marijuana dispensary businesses. Wells Fargo and Vectra Bank have already told commercial loan clients they will have to either evict the marijuana business or refinance their loan elsewhere. This is not only harmful to the new legalized marijuana businesses, but also to the property owners who may lose paying tenants.

This comes just days after federal banking regulators announced what some said was a green light for doing business with the marijuana industry. 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. Vectra made that very demand on a commercial loan that had come due, the client will have to find his own refinance bank that will deal with a property owner who hosts marijuana dispensaries.

While this may seem like discrimination against those who own and host legalized marijuana dispensaries, take into account that the federal government still considers marijuana illegal. While practically anyone over the age of 21 can go to Colorado, show there is, and purchase the newly legalized drug, it can only be used in Colorado. It cannot be taken aboard an airplane, nor can the buyer cross state lines with it. It is understandable that banks have to answer to the FDIC, or Federal Deposit Insurance Corporation, and perhaps could worry about penalties that could occur if they garner to these businesses. Regardless of one’s stance on the legalization of marijuana, it is legal in Colorado, and these business owners and their property owners seem to be pushed aside by bankers out of fear.

While the legalization of recreational marijuana has great financial benefits for the state of Colorado, it seems to be having a negative effect on those who are trying to take out property loans, or refinance property loans. While it seems unfair that these businesses and property owners are being singled out, it must be remembered that all reputable banks must answer to the federal government, and the FDIC. Because of this, and because of marijuana’s illegal stance in the federal criminal system, it seems clear that these stances will not change, at least in the near furture.

Cannabis Industry Creates a Buzz in New Markets

Posted on March 17, 2014 by admin

The legalization of marijuana has been very profitable for Colorado, and it has sparked a new market for products and services that cater to this developing industry. Being one of the fastest-growing and most lucrative industries, the cannabis market is currently valued at approximately $1.4 billion and is anticipated to grow by 64% in 2014, according to market research by The ArcView Group. This is phenomenal, since pretty much every living human over the age of 21 is a potential customer. This has prompte

These figures trump the estimated revenue from the Colorado Senate. At the end of 2013, the Colorado Senate released a statement that estimated that the state’s marijuana industry could reach $1 billion in sales in the 2014, with recreational sales making up about $610 million of that business. For marijuana advocates, taxes were one of the major selling points of legalization. They have said that expanding the market for the federally prohibited plant could give states money for school construction, health care, substance-abuse programs and public health. Colorado’s legalization measure said $40 million in tax revenue would go toward school construction, and in November, voters across this otherwise tax-averse state overwhelmingly approved 25 percent taxes on recreational marijuana.

While new markets are abuzz with these figures, the taxes alone might be enough to halt them. Currently, marijuana sold legally in Colorado is subject to the state’s 2.9% sales tax, an additional 10% state tax on retail marijuana sales and a 15% excise tax on average market rate of wholesale marijuana. However, that currently is not stopping vendors and newbie business owners from jumping on the marijuana bandwagon. For instance, one of first recreational cannabis marketing agencies in Colorado, Cannabrand, is meeting the needs of this high-demand market. Located in downtown Denver, the founders of Cannabrand are turning their passion about the legalization of marijuana into a business dedicated to helping marijuana shops and companies brand themselves.

The newly legalized marijuana industry is creating a major buzz in Colorado. Besides fueling the needs of citizens looking for a legal high, the revenue and taxes are a great help to the state. That being said, only time will tell if the excessive taxes will be the ultimate downfall for legalized marijuana, or if start-ups and companies such as Cannabrand will outlast the eventual consumer freefall that all businesses take.

Denver Joins Chorus Calling for Marijuana Banking Access

Posted on January 23, 2014 by admin

The city council in the region of Denver, Colorado plans on motivating the federal government to support the construction and development of banking services. Millions of dollars are also expected to be generated due to the recent licenses that are given out in the region. Cannabis can now be grown and the Companies can function without any restrictions in regards to payment, payrolls and deposits. The Government is expected to also provide guidance so that financial institutions can smoothly work with the Cannabis Companies. A Councilman named Chris Nevitt pinpoints that Denver, Colorado is paving the road for the future as they show how the process is done correctly and efficiently. The Federal Government does have to get involved though so that the process is smooth for the Cannabis businesses.

The council does have many doubts for the cash business such as it being difficult to pay taxes and increased theft. The lack of financial services is another main worry for Marijuana Merchant Account holders. The Justice Department is also planning on giving a yellow light to the cannabis Companies as they want to work in harmony. The guidance is definitely needed for the cannabis Companies as safety and growth in the industry occurs. Many individuals are debating the issue of whether Companies should be allowed to function, let alone distribute Cannabis to the public. Proponents pinpoint that Cannabis has many soothing and positive effects on the body. People against Cannabis state the negative effects such as tearing down the body structure. Even though there are many proponents and people against Cannabis, the drug will be allowed to be sold in the region of Denver, Colorado without any severe restrictions. Overall, the Cannabis Companies will need support from the banking services in order to function properly in the near future.

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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.

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