California Recreational Use Draws Near, Merchants Still Battle Financial Struggles

Posted on November 22, 2017 by admin

imgres Even in the excitement of legal recreational marijuana sales rolling out in California on January 1^{s t}, a very big problem remains: the lack of financial services. The ability for consumers to consume recreational cannabis in California is expected to bring in billions in tax revenue. Despite this massive revenue and the fact that medical marijuana has been legal for two decades, the industry is still unable to secure the financial services they to operate safely and efficiently.

While business is booming – thanks to laws like Prop 64 – marijuana merchants are struggling behind the scenes. More and more people are showing up to make purchases, no longer afraid. But businesses themselves are finding it harder and harder to operate efficiently. Under federal law, cannabis is still classified as a Schedule I drug (alongside heroin and ecstasy). This status is holding these businesses back.

Even though there are federal compliance guidelines, marijuana’s federal status makes banks very wary. Unwilling to push themselves into a risky situation, they choose to stay away from the industry. Despite the industry’s booming growth.

After receiving rejection letter after rejection letter, merchants are forced to operate in cash. Without a merchant account from a bank, these businesses have no means of writing a check, doing a direct deposit or processing debt and credit card transactions. Paying bills requires only minutes of the typical business owner’s time. For the cannabis merchant, the process is not only long and overwhelming, it isE unsafe. From paying employees and bills to paying taxes, all transactions are done solely in cash.

The Internal Revenue Code Section 280E only complicates things further. This tax code was created with the intention of crippling illegal drug trafficking businesses. Since marijuana is still illegal on the federal level, this tax code affects the marijuana industry’s legal businesses.

420 College CEO, George Boyadjian, says, “It kind of cripples the business a lot. It prevents businesses from growing and reaching their full potential.”

After Prop 64 was passed, California state Treasurer John Chiang formed the Cannabis Banking Working Group. Since then, this group has been working hard on banking recommendations for the regulations scheduled to be released in 2018. The goal of this banking system is to get the most fiscally from the marijuana industry. Even so, the federal-state legality gap remains an issue, and will impact the effectiveness of this system.

“It’s not going to be a perfect pathway unless the federal government allows for this kind of activity and they take cannabis off Schedule I [status],” explains Chiang.

Many marijuana businesses continue to seek cash solutions and safe payment processing services through alternative lenders like Marijuana Merchant Account. Businesses can avoid operating in cash-only, and provide customers with multiple payment options. For merchants trying to safely and quickly pay bills, employees and taxes, this is great news. Rather than waiting for the federal government to reclassify marijuana (who knows when that might be), merchants can secure services now.

Prohibition of Medical Marijuana is a Win for the Black Market

Posted on February 2, 2016 by admin

weed-tax-revenue-elite-daily It has been 20 years since Californians approved Proposition 215, the medical marijuana policy that allows for growth and distribution of the drug to designated patients. Since then, the growth and distribution of medical marijuana has been controlled by local entities. But it was only last year that the state approved the Medical Marijuana Regulation and Safety Act, a group of bills that attempts to regulate medical marijuana on a state level. The act seeks to control the cultivation, manufacturing and licensing of medical marijuana, but maintains local government’s sovereignty over marijuana businesses, cultivation, and delivery. But an erroneous deadline in the bill allows local governments to ban medical pot cultivation, dispensaries, and mobile delivery. This has made many patients who have depended on the drug for treatment nervous.

The new bills gives local governments without ordinances relating to the cultivation of medical marijuana, the ability to do so until March 1, 2016. After that, the authority goes to the state. The deadline has sent some local governments scrambling to enact any type of regulation. In fact, dozens of governments have now imposed bans on medical marijuana cultivation. Last month, Paso Robles, Pismo Beach, Calistoga, Merced, and Tustin banned cultivation and/or deliveries. While other cities like Riverside, voted to allow a limited amount of cultivation.

In an open letter to city and county governments, Assemblyman Jim Wood, stated an intention to strike down the deadline and keep regulation in the hands of local governments. Some local governments have indicated a willingness to take another look at ordinances if the deadline is eradicated.

If the deadline is removed, local governments should focus on regulation and not prohibition. According to Americans for Safe Access, an organization that advocates for medical marijuana, bans on commercial or personal pot cultivation hurt patients. Despite the moral qualms that some citizens may have regarding medical marijuana, the reality is that patients are legally prescribed marijuana from a doctor that has determined they can benefit from use. Banning the growth and distribution of medical cannabis will only benefit the black market. As patients lose access to the drug legally, they will seek it out in places much harder to find and control.

Marijuana Merchant Account (MMA) offers a variety of marijuana payment solutions. We are a leading source of medical and recreational payment processing and loan origination. Be ready for state regulation with consumer and government trusted standards that only MMA can provide.

Contact us to open a marijuana merchant account today!

How Mexico’s Pot Ruling Affects Every Marijuana Merchant

Posted on December 9, 2015 by admin

Medical Marijuana Payment Processing Mexico is taking control when it comes to marijuana – at least somewhat. Thanks to a recent Supreme Court ruling, four people in the Mexican Society for Responsible and Tolerant Personal Use can now grow and use their own marijuana. While four people in a country with 122 million people may not seem like a big deal, it does set precedent in a country known for its marijuana issues. The Supreme Court ruled in this case that it was unconstitutional to prohibit people from growing and using their own marijuana, so more are likely to become green thumbs.

Even though it is still illegal to sell the drug in Mexico, this new ruling could possibly ease the government’s mind. It is well documented that the Mexican government is corrupt, and if marijuana is to be legally sold in the future, there is a good chance that the government would somehow profit from it. However, some could argue the same for the United States. When Denver legalized recreational marijuana, its local tax intake was enormous – over $35 million in 2014 – other states noticed the benefit and more and more are voting for its legalization. While still federally illegal, states are taking hold of the benefits that legalized marijuana sales are providing. Denver earmarked millions for its public school system, and the target was hit quicker than the state initially thought.

Marijuana businesses are big moneymakers, both for the state and the merchant. While they are a good business to get into, the major issues for prospective merchants is the banking industry’s ties to the Feds. Because of this, it can be difficult to get marijuana business funding, short of a rich uncle or a lucky lotto ticket. However, it can be possible with a processor dedicated to the legalized marijuana industry, like marijuana-merchant-account.com. Yes, the industry is tough and risky. But if this is your dream – and it is legal in your area – medicinal or recreational marijuana sales can be a very rewarding path. Be it a large store or a small mobile operation, every business needs funding at some time during its existence. Be sure to contact marijuana-merchant-account.com when it is your time.

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Tax Free Pot Holiday Brings Many to Denver

Posted on October 14, 2015 by admin

Many areas host “tax free” weekends or holidays for various goods: clothing, electronic, back to school goods. Back in September, Denver got creative and held a tax free marijuana sales day. Thanks to Colorado’s Taxpayer’s Bill of Rights (TABOR), the state had already hit their tax cap on the marijuana dealers. So, for one day the 10% tax was dropped. Sales went up, and unlike the fears of the opposition, nothing bad happened.

Even though Denver has shown much success with their legalized recreational marijuana, many still oppose it. It is successful enough that in mid-September it has already passed the tax dollar threshold for the state. Yet, some still view it dangerous and perhaps a way to spark crime in the area. Unlike the good ol’ street dealer, marijuana dispensaries are highly regulated by the city and state, and this regulation makes it tough for a dispensary to partake in any wrongdoing. It also makes it hard for a dispensary to get off the ground, at all. While a merchant may open a dispensary after a bevy of red tape, there is another important task that lies at hand: dispensary check processing.

Finding a good check processor is tough for every business, but it is even tougher for a legalized recreational marijuana or medical marijuana dispensary. These dispensaries are in the processing industry’s “high risk” category, meaning that they are at a higher risk of having fraudulent charges, and a higher risk of closing up shop. The recreational marijuana industry in Denver is showing that these businesses are profitable, and here to stay, but the processing industry for the most part isn’t buying.

Because of this, it takes effort to find the right dispensary check processor. A good rule of thumb is to ask others who have been in the industry for a while. Not everyone will use the same processor, but you can get ahold of the names and start your research. Many start with Google, but top Google search option are paying to show up in the first page, and may not be the best option overall. Be smart with your searches and research, because a check processor is one of the most important things you will obtain for your dispensary.

Contact us for Marijuana Dispensary Check Processing Options today!

New Rules Have Los Angeles Dispensaries Scrambling Not To Close

Posted on October 8, 2015 by admin

When it comes to marijuana dispensaries and their rules, it seems that anything goes with California’s law makers. The newest rules have dispensary operators scrambling to keep their doors open. While Californians have (for the most part) welcomed marijuana dispensaries to their communities, the state’s law makers have been unable to come to terms with the new industry, and have been unable to come to a conclusion on state-wide rules. That is, however, until a few weeks ago when Governor Brown signed new legislation in regards to the state-wide marijuana industry.

This new legislation affects more than just who can work in a dispensary, or more than rules regarding marijuana payment processing systems. This new rule brings forth licensure both – state and city – for dispensaries. The problem is that Los Angeles does not offer city-wide dispensary licensing. Oddly enough, thanks to the citizens voting for Proposition D in 2013, dispensaries are not legal in Los Angeles. These dispensaries only have “limited immunity… from prosecution” according to Prop. D. There are currently 1,500 or so dispensaries in the city of Los Angeles, and they are all at risk of closing.

So, what do you do if you are a marijuana merchant in Los Angeles? First off, don’t panic. Yes, it seems natural to panic. You’re operating a business that isn’t 100% legal on a city-wide level, and you may be afraid of what will happen. Well, thankfully, there is a state-wide legality for marijuana dispensaries. These new laws are a good thing, and they help better regulate the medical marijuana industry. Without these state-wide bills, local ordinances can make their own rules and regulations as they please. These new rules create a Bureau of Medical Marijuana Regulations (sounds fancy, doesn’t it), and it will be operated under California’s Department of Consumer affairs. This helps better regulate the businesses – and gives consumers a place to formally complain if something goes wrong. It also helps further legitimize the often-controversial medical marijuana industry.

Typically, the biggest issues medical marijuana merchants have is locating a marijuana payment processor. However, Los Angeles dispensaries now have to worry about new state-wide regulations. The best thing that existing dispensaries can do is rely on the state laws, which look to protect both dispensaries and consumers.

Let us help you with Marijuana Payment Processing today!

Why Financial Institutions Fear Offering Medical Marijuana Payment Processing

Posted on September 28, 2015 by admin

There has been much talk over why marijuana businesses need marijuana payment solutions. Much has been debated and discussed concerning why it is not safe or practical for these businesses to have to operate in cash only. However, not much has been said about why most financial institutions fear banking with cannabis businesses so much.

Understanding some of the challenges that banks and credit unions face can help to identify and develop the solutions needed to address the problem(s). In fact, much is being done on the federal and local levels, by companies, government authorities and financial institutions to find solutions. Some of the primary issues include risk, work, and profitability.

Cannabis is still illegal at the federal level. Because of this, banking for the cannabis industry is automatically risky for any financial institution and its governing board. A lot of time and work is required in fully understanding and meet the federal regulations that are involved. In the end, there may not be enough profit to justify the work and risk involved.

The problem is not that banks do not wish to offer their services. Many regional and community banks have expressed that they would like to service the cannabis industry. While federal law does not prohibit financial institutions from accepting cannabis accounts, the financial regulatory system imposes so many requirements it makes the idea seemingly impossible.

Some of the risks involved for financial institutions that work with the cannabis industry include: (1) the potential criminal liability, (2) the withdrawal of deposit insurance by the FinCEN, (3) the sudden seizure of assets, (4) the vulnerability of loan collateral, and (5) the increased exposure to civil lawsuits. In most cases, the reward simply does appear to outweigh the risk.

In addition to the research and training that must be done, there is much more “busy” work to do as well. Financial institutions must comply with the Bank Secrecy Act requirement that a Suspicious Activities Report (SAR) is filed on substantial or frequent cash transactions ($10,000 and above). The institution is only given 30 days to verify the transaction as legitimate. Otherwise, a report must be filed. In addition, the cost for the financial institution for filling each SAR can range anywhere from $50 to $200.

There are three different levels of SARs:

“Marijuana Limited” SARS are filed if a business is involved with or related to the production, distribution or sale of cannabis but not in violation of state law or Cole Memorandum; this SAR simply provides the FinCen with identifying information and addresses.

“Marijuana Priority” SARs would be filed if a financial institution suspects that one of the Cole Memorandum’s priorities has been violated.

“Marijuana Termination” SARs are filed whenever a financial institution terminates a marijuana related account.

The deciding question is this: is it possible for a financial institution to service a state-legal cannabis industry, meet Financial Crimes Enforcement Network, Federal Deposit Insurance Corporation or National Credit Union Administration, Federal Reserve, and Justice Department requirements, and still make money? You can see now why many financial institutions question whether or not it is worth the risk to offer marijuana processing solutions to businesses. This is also why many leaders in the industry are so adamant that change must first take place on the federal level before the industry can really make progress with the banks.

Marijuana Payment Processing; Best Option after Banking Setbacks

Posted on September 24, 2015 by admin

As a whole, the industry has experienced a handful of high-profile banking setbacks this year. Industry and banking experts are calling for real changes if things are going to improve on the federal level for the marijuana industry.

In July, the U.S. Federal Reserve Bank of Kansas City denied a Colorado credit union a master account. This account would have allowed The Fourth Corner Credit Union the ability to conduct electronic transactions, process checks and credit and debit cards. The credit union filed a lawsuit in federal court that challenged the decision, saying that it wants “equal access” to the financial system.

Nevada and California have also made moves towards bringing banking services to the industry. Nevada is pushing to create marijuana focused “thrifts”. An amendment to a bill is currently before the Nevada governor that could potentially change the rules so savings and loan companies – “thrifts” – wouldn’t have to obtain insurance from the Federal Deposit Insurance Corporation (FDIC). Thrifts have the potential to become the go-to financial institution for cannabis companies.

Likewise, the California Tax Board is proposing the creation of a state-run bank where cannabis companies would be able to easily deposit their money. For businesses that have been forced to operate in cash only, it would be a much safer and practical option. However, the board has yet to officially write out a plan.

Many feel that the real issue is that marijuana is still classified as a Schedule I substance, making marijuana very much illegal on the federal level. This classification has left banks in a difficult position between state and federal law. Two financial institutions that were going to be big players in cannabis banking reversed course earlier this year. In addition, the First Security Bank of Nevada announced in May that it would no longer accept deposits from the sale of marijuana.

“The only true solution is a change in federal law,” said Jenifer Waller, the senior vice president of the Colorado Bankers Association. “That’s the only way to fix it. It’s still the illegal nature of the activity, and that’s what no financial institution can get over.”

Banks and marijuana businesses are not the only ones who are hoping for changes at the federal level. The agencies in charge of ensuring money derived from cannabis sales is also frustrated with the situation. In keeping money from well-regulated banks, it also prevents the regulation of where that money came from, how it is being used and where it is going.

In the words of Matthew L. Schwartz, a partner with a New York-based law firm that works with cannabis companies, “Right now, if you’re a law enforcement officer and you want to follow the money, that’s difficult to do with an all-cash business”.

Not only is it difficult for marijuana businesses to be transparent without a way to deposit their money, operating in cash only is inconvenient and unsafe. Thankfully, marijuana payment processing has provided a safe and hassle-free option for businesses. The services provided by a marijuana merchant account are tailored to the needs of the marijuana industry. As businesses secure other means of payment processing, the industry as a whole is waiting to see what happens at the federal level.

Contact us for Marijuana Payment Processing today!

Setbacks for Marijuana Banking Shows Need for Federal Change

Posted on August 21, 2015 by admin

There have been quite a free setbacks for the cannabis industry lately, and it doesn’t seem as if state and financial institutions will be able to create a workable solution anytime soon.

Currently, 20 states along with the District of Columbia allow the sale of medical and recreational marijuana. But its production, sale, and possession are still illegal under Federal law.

Regulations state that banks are responsible for monitoring cannabis businesses and ensuring compliance with federal regulations. Financial institutions must also monitor and report any suspicious activity that merchants could be involved in, or report any unorthodox transactions. `

Due to these regulations, most banks have avoided doing business with marijuana dealers. Right now, some banks do serve cannabis companies, but they are generally smaller, local institutions that hide their affiliation with the marijuana industry.

Marijuana merchants are hopeful that larger financial institutions will be brave enough to throw their hats into the rink, yet another roadblock has delayed this hope. Last month, the U.S. Federal Reserve Bank of Kansas City denied a Colorado credit union a master account. Plus two major banking institutions that went public with plans to carry cannabis accounts – reversed course earlier this year. Both First Security Bank of Nevada and Oregon’s MBank have closed all cannabis accounts.

Still there are other efforts to bring banking services to the industry. The state of Nevada is trying to create marijuana-focused “thrifts,” while California is pushing for a state-run bank.

Despite these efforts, many in the cannabis industry are even more convinced that not much will change unless the federal government reschedules marijuana or passes laws to concretely protect financial institutions that want to work with marijuana companies.

Marijuana Merchant Account (MMA) offers a variety of marijuana payment processing options that enable you to stop cash only policies, and accept a variety of payments like debit cards, credit cards, checks, and more. Don’t wait to expand your customer’s payment options, and don’t wait on the federal government or courageous bank for a merchant account.

Contact us to open a marijuana merchant account today

6 States Where Marijuana is Legal but Hard to Get

Posted on July 27, 2015 by admin

Many states across America have decided to legalize marijuana for recreational and medical purposes. However, some states still make it quite difficult for consumers to get their hands on it. With marijuana payment processing accounts being difficult to get approved for and with numerous regulations, not all states make marijuana accessible regardless of it being legal. Here are 6 states that have legalized marijuana, but make it nearly impossible to buy.

Massachusetts

Cannabis has been legal in Massachusetts since 2012, but with tons of licencing issues, it has become nearly impossible to get a hold of. To this day, there has not been a single dispensary that has open its doors.

Minnesota

Minnesota has some of the strictest regulations for medical marijuana use in the country with a maximum of eight dispensaries and only nine accepted conditions that permit patients to use the drug. Plus, the drug cannot be smoked; vaping and pill form are the only two ways that marijuana is permitted in Minnesota.

Illinois

Marijuana became legal for medicinal purposes in 2013, yet it still has not opened up a single dispensary. Less than 2,500 patients are enrolled in the program and still cannot get their hands on any cannabis. Home growing marijuana is considered illegal, making it impossible for patients to use the drug to this day regardless of it being legal.

Delaware

Getting marijuana in Delaware is incredibly difficult since no dispensary has yet to open its doors. With a mere 200 enrolled patients and still no cannabis being grown, this is one of the states that has legalized marijuana without any options made available to patients.

New Jersey

New Jersey passed medical marijuana in 2010, but only opened its first dispensary in 2013. Today, only three dispensaries have been opening, making cannabis scarce and waiting lists long. Plus, the prices are roughly $500 per ounce of marijuana, making them the state with the most expensive weed in the country.

New Hampshire

Medical marijuana has been permitted in New Hampshire since 2013, yet no dispensaries have opened so far. Only five medical conditions qualify for the drug , home growing is not permitted and patients cannot even register for medical marijuana cards.

For marijuana payment processing solutions contact us today!

New MMJ Dispensaries Geared to Make a Ripple in U.S.

Posted on July 24, 2015 by admin

In the last 10 days, 3 states have opened MMJ dispensaries. The states of Massachusetts, Minnesota, and Delaware have seen their first medical dispensaries. Medical marijuana advocates are elated by the openings and believe that they will do wonders for the industry as a whole, but some state officials are skeptical about the positive affects the facilities can have on the local and stare economies, and on the population in general. Here’s a small glimpse at the impacts the new dispensaries can have on their states.

In Massachusetts, the new dispensary faces the potential of running out of supply as only one other dispensary is operating and there are over 9,000 registered patients demanding product. This is because Massachusetts is slow to approve licenses for dispensaries. Since the legalization of medical marijuana in the state, only one out of 15 licensed dispensaries have actually managed to open.

In Minnesota they have the exact opposite problem. There are only two dispensaries in the entire state, but they are struggling due to extremely low demand (there are only 65 registered patients). Their only hope is to get more patients approved for medical cannabis, but that depends on Minnesota doctors clearing more patients for use. So far most doctors in Minnesota have been very reluctant to clear patients to use medical marijuana.

As for Delaware, the state only has 344 registered patients. Even though the state legalized medical cannabis in 2011, it has been slow to open dispensaries. Right now, only one dispensary will be operational. Despite the fact that these states face a few obstacles, the momentum is still on the side of MMJs. 2016 promises to be a better year for dispensaries when even more states are expected to legalize or decriminalize recreational and medical cannabis.

If more MMJ dispensaries open next year with large or sustainable demand, it could mean a significant boost for the MMJ industry as a whole. Now is the time for you to investigate more marijuana payment processing options for your dispensary. The marijuana payment solutions provided by MMA will help grow your company’s business by giving your customers more ways to pay for your products.

Learn more about expanding your customer’s payment options beyond cash today!

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