Marijuana businesses UNBANKED?

Posted on April 9, 2014 by admin

The recreational marijuana businesses may not be unbanked like they say they are. There a dozen stores supplying their customers alternative ways to make payments as long as they have a bank account.

Recreational marijuana businesses are allowing their customers to pay by credit card or ATM. Customers say they were very surprised and pleased when they found out they did not have to use cash to pay for recreational cannabis. They enjoy the freedom of being able to walk up to the counter and pay just like you would in a non-marijuana store with your plastic. Some recreational marijuana businesses were set up to even except Visa and MasterCard. The businesses say this was to ensure that no illegal transactions were entered to their systems.

But Visa has put the onus on merchant banks to decide the definition of illegal. And Visa stands strong to the law and they do not want their network being used for unlawful purposes. MasterCard and Visa backed away last year when there were federal raids in California and Colorado for suspected medical marijuana businesses, disallowing the cards for any purchases since September.

The Federal Government considers the sale of marijuana illegal but they will not challenge the state laws that have legalized and regulated marijuana sales. A statement from the Federal Government reads; “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 (banks) are best suited to make any determination about potential illegality.”

They have taken a very soft approach compared to the position they took on a year ago when Electronic Merchant Systems which is the key company that handles payment processing for the medical marijuana industry. Currently the payment processing of MasterCard and Visa has been suspended.
Bankers have said privately that if they had a little firm guidance from the federal regulators they would like to service the legal marijuana businesses but not until the government removes the onus.

The recreational marijuana stores continue to say they cannot get banking services, but dozens have teller and operating credit card machines in their stores which requires a bank account; but it does not have to be a business account.

The co-owner of Denver Kush Club says “he estimates 40 to 45 percent of his stores retail purchases since New Year’s Day were made with credit and debit cards and that several other stores say they are offering plastic as an alternative to cash but they will not give up the name of the bank they are working with”. The marijuana businesses are showing to have banking relationships but they are not willing to share that information with the public. They just want to be treated as any other business.

Who has the “Fix” for Marijuana Payment Processing?

Posted on April 9, 2014 by admin

There are so many companies coming forth now saying they have the answers to all of the banking and processing dilemmas that marijuana dispensaries are facing.

The most current solution being offered is the Bitcoin / PotCoin a crypto-currency that will target the medical marijuana dispensaries and the recreational cannabis stores like those located in Colorado and Washington State.

On March 17^th 2014 there was an announcement made that two companies Bitcoin ATM Franchise Corporation (“Company”) a wholly-owned subsidiary of First Bitcoin Capital Corp. and Bitcoin ATM manufacturer InterWallet, LLC teamed up to supply the medical marijuana dispensaries. Then on March 3, 2014 Solpower Corporation filed documents with the state of Nevada changing the name of the company to Bitcoin Collect, Inc. setting it up to be the “premier billing platform for the medical marijuana industry.”

Is this really the “Fix” the medical marijuana dispensaries need?

Well there are some very knowledgeable professionals who do not think the Bitcoin is the solution.

Michael Rupkalvis the president of the payment processing firm The Transaction Group said “I would rather bank out of a trash bag in my closet than use the Bitcoin or a Bitcoin ATM”.

Rupkalvis has been around the credit card industry for some time now and he has worked with hundreds of dispensaries. He cautions MMU businesses about using digital currency at this time like the Bitcoin, Potcoin or whatever else they can come up with.

Some think there are some benefits while others think there are drawbacks. The drawbacks make you question the “Fix”.

Digital currencies can fluctuate like crazy
Bitcoin prices are determined by supply and demand. They have fallen about 50% since November.
Digital currency is not recognized so they are a very big risk.
They are not insured by the U.S government so there is no protection for cannabis businesses or patients if the business goes under.
Digital currency is not something that consumers really use (so far only a few customers use the dispensaries)
Marijuana even in all of its forms is still illegal federally.
Digital currencies can be high jacked.

Digital currencies are very vulnerable to hackers and recently one of the largest Bitcoin exchanges had to file for bankruptcy protection. They had to stop trading virtual currency after they were attacked by hackers who found a glitch in their technology and around half a billion dollars just disappeared.

Currently, executives are questioning whether or not they want to work with the cannabis industry because the ATM operators would still have to rely on a traditional banking infrastructure. The cannabis industry is trying to come out of the shadows of the dark under world and deal openly with the legal system and the legal issues that surround the medical marijuana dispensaries, as well as the cannabis manufacturers.

Is it time for everyone to come to the table and brainstorm solutions on how to effectively use Digital Currencies?

For Marijuana Payment Processing contact us today!

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.

After Colorado’s Legalization of Marijuana there are still more banking questions than answers

Posted on March 17, 2014 by admin

The new banking guidance issued by the federal government has left the cannabis industry with more questions than answers, thanks to federal laws that still state that marijuana is still illegal. Many in the industry hoped the memos, would open the floodgates for cannabis businesses to begin accessing traditional banking services.

However, there are some indications that the guidance might not have real implications. Many mainstream financial institutions and banking organizations said they would need to see concrete changes to marijuana’s federal classification under the Controlled Substances Act before they will work with the newly state-legalized industry. In addition, there are some in the industry who believe the guidance will help loosen the banking situation, while others are worried about a possible rise in fraudulent banking schemes.

In the days following the joint memos, major U.S. banks and banking institutions have upheld their refusal to work with the industry. Wells Fargo said the bank is reviewing the government’s new guidelines but would continue to ban cannabis businesses because, based on federal law, the sale of marijuana is still illegal. The American Banking Association stated similarly that cannabis businesses can still face federal prosecution and assorted sanctions.

Regardless, cannabis entrepreneurs should be extremely cautious of frauds and false banking opportunities during the coming weeks and months, as it is sure to run rapid. These companies probably will send the money to an offshore account, or into an aggregate account under the businesses’ name. Both banking practices are illegal, and should be reported to authorities if you are contacted by one. The best thing to do is to try to deal with a local, trusted, reputable bank when looking for loans and accounts.

While the monetary value of the legalization of marijuana is fantastic for Colorado, however federal banking laws may hinder business success. Business owners should be careful dealing with any type of financial institution, regardless of their business, but especially with business that are as risky as the legal marijuana business. When in doubt, stay with familiar banking names, and always make sure you are speaking to a banking manager when doing business.

Company :
Name :
Email :
Phone :
Time Zone :
Volume :
Type :

Tag Archives: marijuana payment processing

Marijuana businesses UNBANKED?

Who has the “Fix” for Marijuana Payment Processing?

Oregon Senate Judiciary Committee Hears Arguments for Local Marijuana Regulation

After Colorado’s Legalization of Marijuana there are still more banking questions than answers

Get Approved!