California Recreational Use Draws Near, Merchants Still Battle Financial Struggles

imgresEven in the excitement of legal recreational marijuana sales rolling out in California on January 1s 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.


The Issue with Rushing Legalized Pot Legislation

480007355There are simple ways to tell if a driver is drunk. There is a breathalyzer, a speech test, and a walking test. But, what happens when a policeman comes across a stoned driver? What test are there? No one — not even highway patrolmen — knows precisely how stoned a motorist can be before he’s dangerously under the influence of cannabis. Unlike with liquor, there’s no 0.08% blood alcohol equivalent for marijuana. There’s not even a common Breathalyzer to measure drugged driving. And there’s nothing around the corner. That’s one problem with rushing to legalize marijuana for stoner use.

This is what many proclaim is the major issue for those who want legalized marijuana. Proposition 64 on the November ballot would legalize marijuana use for anyone 21 and older. And all polls show the initiative winning by a landslide, supported by roughly 60% of voters. And that’s great for many: for the total economy, for those who want to smoke it, and for merchants who want to sell it. However, the questions are still around. What is the legal limit for those who are driving stoned? One blunt? What about those who vape? This is the problem. There aren’t any clear cut laws for this – and it is going to be a major issue.

And there are those that argue that it isn’t an issue now with those who use it for medicinal purchases, but this is a totally different thing. Medical marijuana is regulated by use – unlike recreational marijuana, which can be purchased daily if one chooses. It’s not saying that someone who wants to smoke pot daily shouldn’t – after all, it could be legal in a few days. But what people are hanging onto is the fact that this legalization can boost the economy of a huge and struggling state.

The taxation of legalized marijuana often tops that of cigarettes – and this is set to boom the economy if it is voted in. Come January, the economy of California may flip – and even if someone cannot take their legalized pot out of the state, millions travel to California every year for vacations, so at least some vacationers are liable to purchase pot and help out the state economy.

2015 Legalized Marijuana Records Boom With Marijuana Payment Solutions

MarijuanaColorado’s legalized marijuana sales in 2015 may have hit two major records. While the numbers are not yet certain, the Colorado Marijuana Enforcement Division believes that the legalized products brought in over $900 million in 2015, doubling 2014’s numbers. The other big number belongs to the tax revenue for the state that the marijuana sales brought in 2015, which is upwards of $80 million. These numbers alone should legitimize the industry, but many still are wary of it.

Besides the fact that marijuana – in any form – is still a federally illegal substance, its legalization keeps growing state by state. Currently 22 states allow either legalized medicinal or recreational marijuana growth, sales, and usage. Colorado also allows for the production, sell, and usage of cannabis oil, a medicinal oil that is known to help children with severe autism and seizures. Even though this substance is proven to work, parents who try to take it from Colorado to their home state would face federal penalties if they were caught. This has led many to relocate to Colorado, helping fuel the large economic boom.

Aside from the Feds, some in the public are still questioning the green. While many believe it to be a gateway drug, for many the benefits outweigh the risks. You must remember that many believe the same about cigarettes and alcohol, both of which have been legalized and taxed by the Feds for decades, if not centuries. Merchants should not worry about the fear mongers, for they exist in almost every industry. What they should worry about is their payment options.

Payment options are growing with technology. From the standard options of cash, check, debit and credit cards, to BitCoin, PayPal and ApplePay, there are many types of payments that a merchant can accept. The problem comes when your payment processor will not allow you to accept all of these payment sources. Marijuana payment solutions are available, even for new businesses. A new business can be just as risky as one that is categorized as “high risk”, and a new marijuana business can bring double trouble for many processors. You need to do your research before signing with a processor, but cause not all will allow you to accept your preferred payment methods.

Contact us for Marijuana payment Solutions today!


Lawmakers and the Public are mixed with Legalized Marijuana

Marijuana Business FundingLuckily for the marijuana industry, the legalization is voted in by each state. 22 state currently have some form of legalization, and like any law, not all citizens are pro-marijuana. Lawmakers and citizens on both sides are teaming up, fighting for tougher regulations or more relaxed regulations. Throughout this process, the industry has been growing, providing state revenues that few other industries can touch. This leads to major problems for new and existing merchants, and the riskiness of this industry is far from changing.

While proponents have many reasons for why they oppose legalized marijuana, they seem to ignore the great things that the tax revenue can do for the communities. In Colorado, schools are being repaired and built by the tax revenue, taking a load off the state’s budget. Every state could use these extra funds, but lawmakers are as divided over the legalization as the public. One of the biggest issues for lawmakers is the fact that marijuana in any form is federally illegal. And since federal law typically trumps local and state law, they fear issues that may arise from their decisions. If Colorado has taught us anything, it is that the state and Feds can disagree, and coexist, and no one gets hurt in the process.

This coexisting could work if merchants can check processors saw the benefits of one another. Some legalized marijuana merchants are becoming “cash only” businesses, which not only cuts your customer base, but also leaves you open to robbery. Some choose PayPal, which is a risky choice because they are notorious for closing accounts without notice. This leaves you without a way to accept payments, and without a way to give refunds if needed. You need to look for an ACH check processing source to help better your chances of succeeding. ACH check processing helps you accept not only checks, but also debit and credit. This keeps your business safe, and it helps you get the funds in your business checking account fast. In addition, ACH check processing is one of the safest ways to process payments, leaving you and your customers secure during the process.

For Marijuana ACH Check Processing contact us today!


Legalized Marijuana May Be Headed to Mexico Soon

Close Up Of Man Rolling Marijuana Joint At Home

Close Up Of Man Rolling Marijuana Joint At Home

In early November, the Mexican Supreme Court opened the doors for legalized marijuana sales. While we in the US hear a lot about the dangers of the drug coming from Mexico, the prospect of its legalization may soon change the landscape for both countries. While the country has long had issues with government corruption, many are wondering if this new legalization will be fair to its merchants, along with its consumers.

If Mexico legalizes marijuana, it will not be the first Latin American country to do so. Uruguay has legalized marijuana, and as of 2015, Chile has legalized medical marijuana. Bolivia has went one-step further in the eyes of some, allowing the use of coca, which is the leaf used to create cocaine. North America is also embarking (albeit slowly) with legalized medical and recreational marijuana. There are currently 23 states allowing legalized medical marijuana and recreational marijuana is legalized in 4 states and Washington D.C. With more states (and potentially countries) joining in on the legalized marijuana industry, merchants need to know where to find a processing solution.

Merchants know that finding a payment processor for any type of business is tough. It is even tougher for the marijuana industry because of the industry’s “high risk” status, which is not helped by the fact that the Feds consider it an illegal substance. In this new industry, many choose to forgo a marijuana payment processing account and instead operate as “Cash Only” businesses. This is risky, because it increased your chances of robbery, but it also limits your customer base. The majority of customers today pay with either credit or debit cards, so a “Cash Only” business will deter a chunk of potential business.

To ensure that your business can accept credit and debit cards – as well as stays safe from “high risk” processing issues – you need to look for a marijuana payment processor, like Whether you have a mobile dispensary or a brick and mortar store, there are payment-processing options available. It doesn’t matter if you are operating in a state that is new to the legalized marijuana industry, or are in a state that has long-held legalization status, you need to make sure that your business is secure – both with product and payment solutions.

Contact MMA for Marijuana Payment Solutions today!