California Moving Towards Public Banking for Marijuana Businesses

medical marijuana payment processingToo much money? Is that even a thing? For marijuana-related businesses, it is. They make a lot of cash, but have no way to safely deposit it at the bank like other businesses. Banks are subject to heavy regulations and are unwilling to offer solutions to the cannabis industry. Under federal law, marijuana is still a Schedule I substance – listed alongside heroine and LSD. As far as the Drug Enforcement Agency is concerned, there is no accepted medical use of marijuana and a high potential for abuse.

As a result, cannabis-related deposits are not federally insured. These business’ cash are also subject to seizure by the feds. To try to find some solution for these businesses, California is considering whether a state public bank could be the answer. With a projected $6.5 billion in revenue by 2020, the state is anxious to find secure processing options for this potentially very lucrative industry.

On August 10, state treasurer John Chiang met members of the Cannabis Banking Working Group. This meeting was arranged following Californians vote to legalize recreational marijuana, and the issue on the table was exploring bank access for cannabis businesses (or the lack thereof). California estimates that 70 percent of marijuana-related businesses are currently unable to secure the bank accounts they need.

According to Chiang, public banking is an increasingly popular idea for not just marijuana businesses, but others as well. The Great Recession of 2008 left many business owners dissatisfied with the private finance system in the U.S. If California successfully establishes a public institution, it would be run by local treasury officials and beholden to state taxpayers.

The only public bank in the U.S. (for now) is the Bank of North Dakota. This institution was established in 1919 when farmers were unable to secure loans through private banks under the federal system. Colorado and Massachusetts are also considering a similar solution to California. However, those brave enough to consider this option face many obstacles and risks and a complicated process. For example, marijuana-related businesses would still be unable to secure traditional marijuana credit card processing.

While many Californians are optimistic about the future, for now the safest options for marijuana-related businesses remain either in cash (extremely unsafe and impractical) or an alternative solution – like marijuana credit card processing from a high-risk provider like MMA. Depending on the business type, merchants can secure either a recreational or medical marijuana merchant account in as little as 24 hours.


Can Native American Tribes Solve MMJ Banking Problems

unnamedFor the last few years, marijuana merchants have searched for legitimate payment processing solutions. Even businesses headed by experienced entrepreneurs with solid business plans have been rejected by banks and other financial institutions. Now cannabis companies might find banking solutions with Native American tribes. A new company called CannaNative, is currently negotiating with tribes in the western U.S. to bank with marijuana companies.

Anthony Rivera Jr., a partner with CannaNative, believes that tribes are the solution to the banking problem for cannabis in the country. With the Federal Reserve and other large banks denying cannabis companies access to their facilities, Rivera thinks they can utilize tribes throughout the western United States within six months to offer financial services.

The bank process would go something like this: companies would make accounts, armored car service would pick up cash deposits and transport funds to secure facilities on tribal land. The client would then have access to the funds electronically. Of course companies must reside close to a specific tribe to enjoy these services. Still there are many reservations in the western hemisphere of the US, from California to Arizona to Washington State to Colorado. Rivera says that they have a handful of tribes that are interested in doing business with marijuana merchants. But some critics don’t think the CannaNative business will be able to get off the ground since there have been some efforts for the federal government to find some type of banking solution for years. If a solution can be reached, there will be no need for CannaNative’s services.

Still Rivera points out that tribes have been managing large amounts of cash since the 1980s, ever since casinos began to occupy tribal lands. He believes that their cash management systems can be adapted to the cannabis industry with the right support and strategies. Rivera and his partners are currently negotiating with cannabis merchants and tribes in the western U.S.

Marijuana Merchant Account (MMA) offers a variety of marijuana payment solutions for cannabis merchants. Your company does not need to wait for organizations like CannaNative to have comprehensive and legal banking solutions.

Contact us for marijuana payment solutions today!