Oregon Senate Judiciary Committee Hears Arguments for Local Marijuana Regulation

Posted on March 19, 2014 by admin

Legal battles continue in the state of Oregon over control over medical marijuana regulation. The Oregon state Senate Judiciary Committee held a public hearing in February about a proposal for medical marijuana regulation. The proposal sought to give local authorities the ability to regulate the new marijuana industry.

Senate Judiciary Committee Proposal

The Association of Oregon Counties and League of Oregon Cities supported the proposal. The changes would include the limitation of products that may be attractive to kids as well as forbidding a dispensary being within 1,000 feet of a school. The proposal intends to give local governments the ability to regulate the marijuana industry. Oregon’s current legislation has little regulation for the industry.

Other supporters of the proposal include the Associations of Chiefs of Police, the Oregon Farm Bureau, Associated Oregon Industries, Oregon Forests Industries Council, the Oregon District Attorneys Association, and the Oregon Association of Realtor.

Oregon began registering medical marijuana facilities March 1st, 2013.

Local vs. State Regulation

The underlying struggle for regulation is between local government entities and the state government. Local organizations hesitate to trust the brand new marijuana industry to regulate itself. The new industry features little standards for appropriate business practices. The lack of regulation from the state level creates unease for those who didn’t support marijuana legalization. Misgivings are still high about this new industry.

Proponents for state regulation argue that local governments shouldn’t restrict patients from accessing their medication. State-wide regulation would mean Oregon residents would have uniform access to medical marijuana regardless of where they live.

Impact on Dispensaries

The regulation of marijuana laws can have a profound impact on marijuana dispensary businesses. If a business is registering as a marijuana dispensary local regulation could break the business. A business could have to navigate a city’s regulation, the county’s regulation, state guidelines, and federal guidelines.

The layered system of regulation could cost a marijuana dispensary time, resources, and money–all commodities a small business can rarely afford. As Oregon and other states begin moving towards legalized marijuana dispensaries, medical or otherwise, dispensary owners will need to keep a keen eye on regulation legal battles.

Mainstream Investors Begin to see the Value of Legalized Marijuana

Posted on March 17, 2014 by admin

The legalized marijuana business may not be so taboo after all. Many investors – big-name investors – are flocking to the industry willing to lend a hand, as well as some financial resources. In the past few months, investors such as Angel/ArcView Group, has seen a phenomenal increase in membership. However, will this be a quick rise and downfall, as are most fads, or are these investors here to stay?

Thanks to the recent influx in membership, ArcView has found some big-named donors. ArcView members now include Tom Bollich, the co-founder of online social gaming giant Zynga; New York State assembly member Steve Katz; and Douglas Leighton, the founder of Dutchess Capital, a New York-based investment firm that manages $125 million in assets and has invested more than $200 million in companies across the globe. While some of these names are not much of a surprise (Tom Bollich, for example), others such as Steve Katz are. 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.

However, most fads see growth in their first weeks, months, or even years of its introduction. The downside is that most of the goods and ideas are in fact fads, and they will eventually go away as consumer interest fades. Marijuana may be different, as it has been around for centuries (the first documented mention of cannabis was is 3000B.C.). While excessive taxation may hinder many from purchasing, the legalized aspect will help bring in consumers who would have never dreamed of purchasing illegal marijuana. Basically, every human over the age of 21, who have a current identification card, are potential customers, and these savvy investors know it.

While the legalization of marijuana in Colorado is controversial, that has not stopped deep-pocketed investors from wanting in on the goods. With controversy comes media, and with media comes more sales. However, with legalized marijuana media attention may not be necessary for enhanced sales, as it is known worldwide for its properties, both good and bad. Only time will tell if these investors will stay put long-term, or if they will move on to another fad when the sales of legalized marijuana stabilize.

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.

The Future’s Looking Bright for the Cannabis Industry

Posted on January 23, 2014 by admin

Many businesses with marijuana merchant accountsare sure to be happy with the way 2014 started. Shares of public cannabis companies enjoyed serious gains on the first day of trading, since recreational marijuana stores were successfully launched in the state of Colorado. Many stocks rose at least 20% above their 2013 closing price, a few surged to more than 60% and one touched a whopping 80%. This shows a significant contrast to the bigger stock markets, which surprisingly dipped into the red.

This evidence certainly sparks lots of optimism where the cannabis industry is concerned, and has produced lots of excitement about its potential future. Many investors predict that the marijuana laws from state to state will only become more lenient and cannabis businesses are definitely thrilled at this prospect, because they know that they will benefit from this highly. Colorado’s recreational cannabis stores experienced sky-high demand after their launch, which just goes to show that marijuana businesses have every right to be excited!

Not only this, but the recent “cannabis chaos” has signified that Colorado is not the only state to become less strict on marijuana laws. Senator David Zuckerman has recently introduced a bill to legalize and regulate the sale, production and use of marijuana in Vermont. Although he has said that the legalization will not occur this year, it is still his primary goal, and he will keep building and studying the idea until he achieves it. This bill shows how the recent legalization in Colorado is influencing other states to perhaps follow in their footsteps.

Overall, the above evidence certainly shows how bright the future looks for the cannabis industry, particularly those with marijuana merchant accounts. It suggests that states are perhaps changing their views on the legalization of cannabis, especially since Colorado’s move to launch recreational marijuana stores. With this and the spreading use of medical marijuana, it is obvious that the USA is realizing what it can gain from its legalization. Watch this space.

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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Approximately 348 Marijuana Licenses Handed Out in Colorado

Posted on January 23, 2014 by admin

The state of Colorado handed out the business licenses to Cannabis Companies for the first time. The enforcement division announced approximately 348 licenses were given out in the state of Colorado. 270 of the 348 licenses were handed out to businesses in the region of Denver, Colorado. The 348 licenses include 178 cultivation facilities, 136 retail businesses, 31 manufacturing Companies and 3 test facilities. No other state has given out the licenses for businesses that ultimately produce the marijuana.

Marijuana sales are also expected to boost as the licenses are handed out to businesses. The city of Denver and the Department of License and Excise approved 42 retail stores in the region. The current requirement to receive a marijuana license is that businesses should have an “existing” status. Everybody else will be considered late in the year of 2014.

Existing marijuana Companies will have 3 options that will be available:

Convert recreational sales for people 21 and over.
Sell the recreational and medical marijuana to people 21 and over.
Procure a “co-location” license which will allow the business to sell cannabis to people 18 and over.

Only a small fraction of cannabis businesses actually opened up on January 1^st but many are expected to open up weeks and months after the 1^st day of January. Many people are against and for the recent licenses handed out in the state of Colorado. Proponents of marijuana pinpoint the relaxing effects and the medical benefits. People against marijuana pinpoint the negative effects of using drugs such as the increase of procuring medical conditions.

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$100M Being Sought by Private Equity Fund

Posted on January 23, 2014 by admin

Two executives from High Times have launched a private equity fund and they are attempting to raise $100 million to allow for investments in cannabis companies. The HT Growth Fund has plans to make individual investments of $2 million for marijuana merchant accounts in ancillary companies. These companies, however, do not actually handle any marijuana.

The purpose of these marijuana merchant accounts will be to look for businesses that are established and have reached growth limits. These will be businesses with no access to the traditional capital markets. Instead they will be startup businesses that need assistance with early stages of financing. Five years is the average exit time.

This fund is being run by Michael Kennedy and Michael Safir both of which who have ties with High Times Magazine. If the two are successful then this will make HT Growth the largest funding source in the industry. Some difficulty will lie ahead because many of investors are unsure about providing funds for the cannabis industry.

Kennedy has been with High Times since the 1970’s and has served as both general counsel and director. He runs a law firm that is located in New York City. In addition, he is also a major investor with the company that is owner of the magazine. Safir has been business manager for High Times since 2010.

Additional cannabis-focused investment groups and funds have started forming due to the climate improving daily. Plans by the federal government to being hands-off with marijuana businesses will also serve to have investors more willing to fund these businesses that are starting up.

Marijuana merchant accounts are set up for businesses that sell medical marijuana and need to process credit card payments as well as debit card payments.

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Into the Unknown: Pricing Recreational Cannabis

Posted on January 7, 2014 by admin

On January 1^st recreational marijuana became available for retail purchase in the state of Colorado. From a business standpoint, this is uncharted territory. Recreational marijuana is a completely new sector leaving business owners interesting decisions to make regarding pricing. With a limited supply a massive demand expected, how cannabis is priced can make or break a marijuana dispensary in under a month’s time.

Setting a price for an uncharted market is difficult enough, yet with the peculiarities of supply and demand for this industry in Colorado business owners are navigating truly uncharted waters. All indications seem to forecast a massive demand and a very limited supply. This means that marijuana dispensaries have to walk a knife’s edge on pricing. Price cannabis too high and you will send potential long-term customers into the arms of competitors. Price cannabis too low and you can run out of inventory in the blink of an eye and be forced to close or ration your product.

Pricing strategies are pivotal, especially in the early months before businesses can begin pumping out their own production of cannabis. There are three basic pricing strategies dispensaries can take in the early months once recreational marijuana is open for retail:

1) Begin by taking the prices from medical cannabis and increasing them slightly. This will serve as your baseline that you can tweak depending on the market which may be shifting and changing on a daily basis. Customers then pay the hefty taxes on top of the retail price, taxes that come out to substantial 36%.

2) Bank on a huge demand and low supply and double or triple the price of medical cannabis. This will create early positive cash flow and may protect your inventory. Yet, price too high and you can bottleneck sales and send potential customers to competitors or back to the black market.

3) Absorb some of the taxes to create a competitive advantage. The idea here is to make deals for your customers to create loyalty. By absorbing some of the fees from the heavy 36% tax you can modulate pricing freely while still cutting your customers a break.

Marijuana dispensaries don’t have anyway to forecast the pricing storm that will engulf the market during the early months. While the opening of recreational marijuana will make for a fascinating case study in supply and demand for economists, that will offer little comfort to business owners. Market fluctuations on a daily basis and a severely limited supply will govern prices and the reactions of customer demographics will be critical to monitor regarding their preferences in price, tax duty, or whether they return to the black market until prices stabilize and supply becomes regular.

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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.

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.

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Tag Archives: marijuana merchant account

Oregon Senate Judiciary Committee Hears Arguments for Local Marijuana Regulation

Mainstream Investors Begin to see the Value of Legalized Marijuana

Marijuana Properties are having a Hard Time Finding Financing in Colorado

The Future’s Looking Bright for the Cannabis Industry

Denver Joins Chorus Calling for Marijuana Banking Access

Approximately 348 Marijuana Licenses Handed Out in Colorado

$100M Being Sought by Private Equity Fund

Into the Unknown: Pricing Recreational Cannabis

US Treasury to Discuss Marijuana Dispensaries and Banking Practices

New York Revives Medical Marijuana Discussions

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