The Nerve-Racking Process of Paying Marijuana Taxes

Posted on August 24, 2017 by admin

The news is full of updates on the state of the marijuana industry. Reports of which states have legalized recreational and medical marijuana, along with the many reasons why cannabis is beneficial. One of the less mentioned topics is the nerve-racking process these marijuana merchants go through to complete otherwise simple, mindless business tasks.

Consider the state of California, for example. On January 1, 2018, recreational marijuana will become legal in California. Coupled with the already legal medical marijuana, this could quickly push California to be the largest legitimate marijuana economy. However, there is one large, crippling aspect to the marijuana industry that makes it difficult – even dangerous – to operate in: most merchants can’t use a bank. An emerging marketplace, with a projected $7 billion value, finds itself operating in cash-only.

How is this possible? Marijuana is classified by the DEA as a Schedule 1 substance (high potential for abuse, with no currently accepted medical use in treatment in the U.S.), alongside heroin. Thus, it remains illegal under federal law. With intense federal regulation, banks do not want to handle the risks involved in working with businesses that offer cannabis product.

Within the next few years, California is expecting to collect $1 billion in new tax revenue from the marijuana industry. L.A. has an estimated 1,000 to 1,700 medical marijuana dispensaries. In 2016, only 200 paid city taxes. Next year alone, the state expects to collect $40 million.

This stunning amount must be processed through a bank, right? Think again. With no bank solution, these merchants must closely manage their cash to ensure they have enough to cover taxes. While other businesses send a check or wire the money via their laptop, marijuana merchants count their (massive) cash on hand, make arrangements to drop off the tax payment –hundreds of thousands of dollars in many cases – and then make a nerve-racking trip to the agency. The biggest fear is being robbed in route.

“When now everyone makes payments through their cellphone, it’s tough to see that I’m left to the archaic version of counting money”, says Jerred Kiloh, owner of the Higher Path medical marijuana dispensary in Los Angeles.

More and more merchants are beginning to discover the advantages of securing a merchant account to sell marijuana through an alternative provider like Marijuana Merchant Account (MMA). Specializing in working with the cannabis industry, these solutions provide safe and efficient payment processing options. No longer restricted to cash only, MMA offers credit and debit card processing and e-check processing. In an industry where merchants, banks and armored truck services fear backlash from the federal government, merchant accounts offer a real, safe solution for marijuana merchants.

Number of Banks Serving Marijuana Businesses Increasing, or Is It?

Posted on July 13, 2017 by admin

Many in the marijuana industry were optimistic when they read the recent report from the U.S. Department of The Treasury’s Financial Crimes Enforcement Network (FinCEN). This report revealed a sizeable increase in the number of banks and credit unions providing financial services to legal marijuana business. In FinCEN’s latest Marijuana Banking Update, 368 depository institutions were “actively banking marijuana businesses in the United States” at the end of the first period (March 31).

The marijuana industry is heavily cash-oriented, which isn’t easy for the 29 states that have legalized medicinal or recreational use of cannabis (or both). So, the news that the number of depository institutions working with legal marijuana business was up from 333 at the end of 2016 to 368 was very welcome. The November 2016 elections also added eight states to the list of those that have legalized recreational use: California, Nevada, Massachusetts and Maine.

Even with these changes, experts caution that the numbers are not sharing the whole story. FinCEN requires financial institutions to file three types of so-called suspicious activity reports (SARs) if they have cannabis-industry clients. The three different types of reports consist of:

Marijuana-limited is for routine tracking of these businesses, and shows the bank believes the business is complying with state law.
Marijuana priority SAR indicates that the financial institutions believes the business might be in violation of state law.
Marijuana termination reports that the institution has ended its relationship with the cannabis business for due-diligence, legal or business reasons.

According to FinCEN, since January 2014, financial institutions have cumulatively filed 20,288 marijuana-limited SARs. There have been 7,326 terminations SARs, and 2,007 priority SARs. Despite the increase in marijuana-limited SARs, FinCEN says the report shouldn’t be taken as hard evidence that financial institutions are warming up to the cannabis industry.

Jim Petkovits, vice president of education and training at WesPay, a San Francisco-based regional automated clearing house association, says some banks will quietly serve only one or two cannabis clients. Others find out that they’ve unwittingly served a marijuana business and quickly terminate the relationship by generating a SAR.

Petkovits did go on to say that “there definitely seems to be more interest, discussion around it.”

However, interest doesn’t necessarily mean acceptance. Most financial institutions are waiting for the go-ahead from Congress. (Marijuana remains illegal under federal law.) Many doubt that acceptance will come anytime soon, considering Attorney General Jeff Sessions statement in April that he intends to harden federal drug-enforcement policy.

This has left many cannabis businesses with little to no merchant account options, making it impossible to secure payment processing solutions. This has led many alternative processors – like Marijuana Merchant Account– to reach out and offer marijuana business funding options and marijuana merchant accounts. For now, it appears cannabis business’ best option is to work with a high-risk specialist to secure safe, flexible business funding options.

Can Native American Tribes Solve MMJ Banking Problems

Posted on December 15, 2015 by admin

unnamed For 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!

Federal Reserve Says No To Cannabis Money, Why?

Posted on December 11, 2015 by admin

The-US-Federal-Reserve-II-A1 The U.S. Federal Reserve stated in a Colorado court that it won’t accept money made from the sale of cannabis since it is still an illegal drug under federal law. The Federal Reserve also asks to dismiss a lawsuit brought against it by the Fourth Corner Credit Union wanting to service a marijuana business.

This denial by the Federal Reserve is another blow to Colorado’s efforts to find banks to work with burgeoning marijuana entities. The Fourth Corner Credit Union wants to serve Colorado’s $700 million marijuana industry. The credit union applied for a master account with the Federal Reserve to work with marijuana businesses – but the request was denied. The credit union subsequently filed a lawsuit asking a federal judge to overturn the Federal Reserve’s decision. The judge has not revealed when he will make the decision.

Currently, 20 states and the District of Columbia allow the sale of recreational and medical marijuana. But its production, sale, and distribution are still banned under Federal law. In states that do allow cannabis production and sale, merchants who want to do business with banks are still having a difficult time acquiring merchant accounts. Regulations state that banks who do business with cannabis merchants are responsible for monitoring them and ensuring compliance. Banks are then required to report any suspicious activities. The heightened level of oversight and sizeable fines if banks miss illegal activity, are more than enough to keep most banks away from cannabis accounts. Still some smaller, usually local institutions, do offer small merchant accounts.

But as the market expands and the profits of cannabis merchants grow, the needs for larger institutional resources becomes more pressing. That’s why some states are still fighting to bring banking services to the industry. The state of Nevada is currently trying to create marijuana-focused “thrifts,” and California is still pushing for a state-run bank.

Despite these efforts, most in the industry know that the market won’t realize its full potential until the federal government passes laws that clearly protect financial institutions who work with marijuana companies.

Marijuana Merchant Account (MMA) offers a variety of cannabis payment processing options like debit cards, credit cards, checks, and more. Don’t wait on the federal government or large banks to help make your merchant account.

Call 1-800-466-1809 or click below for Marijuana Business Funding Options from MMA

Dispensaries Make Money, But Who Will Process Them?

Posted on October 14, 2015 by admin

Legalized marijuana and medical marijuana dispensaries bring in money for the areas that they operate in. Sometimes they are heavily taxed (i.e., Denver’s tax is 10%), but that doesn’t stop the masses from purchasing what they need – or want. While the industry brings in a ton of cash (and checks, and plastic card payments), it can be hard to find a willing payment processor. The banking and processing industry has labeled the industry “high risk”, which makes it a chore to find an experienced, reliable, educated processor.

While tough, it can be done. Instead of choosing the first processor that pops up on Google or Bing, you need to thoroughly research your options. The first thing that you nee to understand and accept is that the marijuana industry, be it legalized medical or legalized recreational, is not a welcome sight for the majority of payment processors. The banks are mandated by the Federal government, and the Federal government considers marijuana illegal. It’s understandable why most processors and banks do not want to deal with legalized marijuana of any form.

While a marijuana merchant may be happy choosing the first option that comes along, it’s always best to do your research. Not all who claim to offer up a marijuana payment solution are experienced in the industry. This is an industry that has ever-changing rules, regulations, and threats. You need to make sure that your processor is prepared to deal with these changes, as well as the issues that can arise in the industry on a day-to-day basis. It’s also a good idea to look for domestic processors, because international processors have more red tape to cross in order to process your payments without issues.

You also need to be prepared before you look for a processor. While some require less paperwork than others do, you do need to make sure that you have everything set up in advance, to keep the issues at a minimum. From your state and local paperwork, to state and local tax returns, to business records and even your own personal finance records, the more prepared you are, the better the chances you will have obtaining marijuana payment solutions.

Need marijuana payment solutions? We can help.

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!

Cautious Bankers Weigh Risk vs. Profit – MMJ Merchant Account

Posted on September 23, 2015 by admin

For banks, the marijuana industry has become a question of risk vs. profit. Even though marijuana is becoming legal in more and more states for both medical and recreational use, the vast majority of banking institutions in the U.S. are sitting on the sidelines. Bypassing what could be billions in business.

The strict regulations involved, the extreme scrutiny and the overwhelming amount of paperwork required deters banks from making marijuana banking a line of business. The very few banks that are willing to open accounts tied to cannabis typically impose steep fees and limitations on their clientele. According to the guidelines issued by the Treasury Department, banks involved in the marijuana industry must do “due diligence” in the monitoring of their customers for suspicious activity.

Robert Rowe, vice president and associate chief counsel of the American Banker’s Association, explained that no other industry comes close in terms of what is required for compliance. “If a bank has a restaurant or a tavern that serves alcohol, they don’t have to go in there and monitor to make sure the business isn’t serving alcohol to a minor. With a marijuana business, the obligation shifts back to the bank”.

With banking unattainable for the majority of dispensary owners, ATMs have become one of the most feasible ways to keep customers supplied with cash. Because marijuana is not cheap, it is important to dispensary owners that they have an in-store ATM. A high-quality strain of marijuana can easily cost upwards of $300.

Jamie Perino, the CEO of Euflora dispensaries, was unable to find a bank that would work with her. Now, she must pay her employees and her landlord with cash. She can only accept cash from her customers, and she must pay her taxes in cash. Her ATM for Euflora’s 16^th Street Mall location is even listed under a different business name in order to avoid close scrutiny.

While it is not illegal for banks to work with the cannabis industry, the federal requirements involved make it more work than is profitable for financial institutions. Any bank that deals with the cannabis industry is going to be under a lot of scrutiny, whether they’re involved with ATMs or checking accounts. This leaves many businesses with the cash only option, which is incredibly unsafe and inconvenient.

Another increasingly popular option for marijuana businesses is a medical marijuana merchant account with a high risk provider. The advantage with this type of merchant account is that safe payment processing can be secured without worrying about the endless red tape involved with traditional financial institutions. The application process is simple and hassle-free.

The conservative approach of bankers is justifiable. After all, they have the responsibility of dealing with other people’s money. Unfortunately, not much can be done for the present banking situation of the marijuana industry until Congress makes changes. For now, businesses are forced to either operate in cash or seek alternative solutions like medical marijuana merchant accounts.

Contact us for a MMJ merchant account today!

The Fourth Corner Credit Union Denied Master Account by U.S. Federal Reserve

Posted on August 26, 2015 by admin

For some time, businesses have been waiting to see the outcome of The Fourth Corner Credit Union’s request for a master account with the U.S. Federal Reserve. The master account would allow the credit union to work with marijuana companies looking for a bank. However, The Fourth Corner Credit Union, located in Colorado, has been denied a master account by the U.S. Federal Reserve, despite having state backing; this threatens to close yet another avenue for cannabis businesses that are struggling to secure a bank account.

Before this denial, the Fourth Corner had lined everything up with the state of Colorado. Last November, it received a charter from the state while waiting for the National Credit Union Administration to sign off on insurance and for the Fed to issue a master account.

With this denial, The Fourth Corner Credit Union has filed a lawsuit in federal court that challenges this decision. According to the New York Times, the credit union says that it wants “equal access” to the financial system. This has become the latest in setbacks for marijuana companies that are looking for a bank to do business with.

Due to marijuana’s classification as a Schedule I drug, banks are extremely hesitant to do business with anyone in the industry. According to the Drug Enforcement Administration (DEA), Schedule I drugs, substances, or chemicals are “defined as drugs with no currently accepted medical use and a high potential for abuse”. As a Schedule I drug, marijuana is listed with heroin, lysergic acid and diethylamide (LSD), ecstasy and several others.

While medical and recreational use have been legalized in many states, it is still very much illegal on the federal level. Worried about what this might mean for them, banks refuse to work with marijuana companies. This has forced many of these companies to operate cash-only or to seek alternative means of funding and payment processing.

Thankfully, alternative providers have worked well for many marijuana companies. Medical marijuana merchant accounts by high risk providers have actually become more accessible than an account with a traditional source. High risk providers like Marijuana Merchant Account (MMA) have a simple, fast and hassle-free application process along with minimal documentation, unlike the experience of working with a bank.

In addition, if bad credit has ever been an issue for the business owner, a high risk provider is much better equipped to work with such an issue. High risk providers’ merchant accounts are tailored to meet the specific needs of an industry; thus, marijuana companies have been turning to such providers and applying for medical marijuana merchant accounts. Instead of waiting to see what the future holds, many companies are making things happen now by securing marijuana merchant accounts to ensure their business’ profitability.

For MMJ payment solutions contact us today!

Cannabis Trade Groups Adds Pressure to Improve Marijuana Bank Access

Posted on August 26, 2015 by admin

For the majority of medical marijuana companies, the entrepreneurs behind them wish to be completely transparent and viewed as a legitimate business. Because financial institutions are regulated on the federal level, most banks and credit unions have been reluctant to offer their services. Even though the business is legal, financial institutions still shy away.

Because of this, many marijuana businesses are forced to operate in cash-only. This is not only completely unsafe for the business, but it also makes it difficult for the owners to be transparent. The head of Oregon Banker’ Association, Linda Navarro, revealed to the Northwest Public Radio that many banks would be willing and even happy to offer their services, but the current federal barriers are just too great for them to manage at this point in time.

As a result, The National Cannabis Industry Association, a national trade group, is expanding its advocacy efforts on Capitol Hill. The purpose behind this expansion is to address the industry’s top federal priorities: fair federal taxation and basic banking services. In this effort, The National Cannabis Industry Association (NCIA) has partnered with two D.C.-based public affairs firms: Jochum Shore & Trossevin PC and Heather Podesta + Partners.

The NCIA Deputy Director, Taylor West, said that “Bringing on these two firms is a big step forward for us, but also a very real indicator of the fact that we as an industry are taking our legislative strategy very seriously. We recognize the benefits of bringing in highly skilled people who work in this environment”.

The regulatory structure that banks must follow has made it difficult for marijuana businesses. They are treated much differently than other types of legal businesses. The hope is that the teaming of these firms will be the answer to the industry’s needs in that it will revolutionize the way those in the sector do business.

While marijuana companies wait for the industry to grow and for improvements to be made, many companies are turning to medical marijuana payment processing from alternative providers. Providers such as Marijuana Merchant Account (MMA) specialize in offering accounts that are tailored to a marijuana company’s needs. A great advantage to this type of merchant account is that the application process is fast, simple and hassle-free. Until the pressure and regulations for banks are changed, medical marijuana payment processing will remain a great option for marijuana companies in need of payment processing.

Contact us for medical 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

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Category Archives: Marijuana Banking