Banking Woes Continue To Plague Legal Pot Industry

Marijuana Leaves on Top of PlantsFederal Banking Rules Not Working In Favor Of The Legal Cannabis Industry

Legal marijuana entrepreneurs still find a difficult time getting banks that will accept them. The situation is devastating for the cannabis industry given that more and more states have decriminalized the medicinal and recreational use of marijuana.

Mason Tvert is a renowned Denver-based marijuana policy specialist who has actively participated in the passing of cannabis laws, e.g. Amendment 64 in 2012 that saw recreational cannabis become legal in Colorado.

The struggle to streamline marijuana banking laws

Tvert has spent years trying to solve the banking issue in the cannabis industry. And though hailed as “marijuana’s top evangelist,” he admits that streamlining marijuana banking laws has been a “formidable hurdle.”

But he is positive, “more so now that there’s a bill in the House of Representatives with over 90 co-sponsors: The bipartisan measure dubbed the “States Act” sponsored by Massachusetts Senator Elizabeth Warren(Democrat) and Colorado Senator Cory Gardner (Republican) may shed new light on the issue.” Tvert says.

According to him, passing this bill will mean all transactions initiated at the state level will be viewed as legal under the federal law provided that the business falls in line with the state laws.” Only that way can banks feel safe (from feds) working with entrepreneurs in the pot industry.

Tvert, however, remains realistic about his expectations despite his “strong support for the measure.”

“Regrettably, it’s one of many matters falling victim to the stalemate we experience in Congress. Big Banks need reassurance—most of them want it in a bill and not merely in policy enforcement.”

Among the victims is MPP, the firm that Tvert’s presently stands for.  Last year, MPP’s supporting bank PNC—a non-profit advocacy foundation they’ve been working with since 1995— surprisingly cut ties with the firm.

Tvert says that according to news stories, PNC had concerns about the dangers of working with marijuana-related business.

Luckily, MPP later found a new bank that they have kept secret, but Tvert is afraid they may lose a partner owing to the unforgiving banking policies.

Why Did PNC reject MPP after years of working together?

“I’m not aware of the bank’s concern was “offering services to a state-regulated marijuana business,” says Tvert.

The marijuana activist also says he is not aware whether the bank’s decision was linked to the Trump administration known for fervently anti-marijuana advocates like Attorney General Jeff Sessions.

How are marijuana businesses handling their finances?

What happens to all the money these legal cannabis firms make if banks won’t work with them?

Most legal pot companies are now forced to deposit money in safe boxes or contract their cash holding firms, says Tvert.

Secondary vendors like security firms and armored vehicle companies have also come in to fill the niche.

Wrap Up

While these “banking” options are helping marijuana businesses move on, it’s obvious these alternatives are still enough surety of legitimacy for such an upcoming industry.


Lawmakers Advocate Marijuana Banking Protocol Reforms

marijuana-money-profits-earnings-medical-marijuana-projectCash is King, but having a multibillion-dollar industry rely entirely on it can be a struggle! The whistleblower, Senator Cory Booker pointed out an issue that lawmakers must mull over. He says businesses, even those that sell medical cannabis cannot obtain bank accounts, access funds or issue payroll – even in a place like New Jersey, where medical marijuana has been legal for almost a decade (since 2010).  All these because marijuana is still classified as Schedule I under federal law.

“People are literally sitting on thousands of dollars in cash because no banks will open doors for them. They are settling invoices, buying equipment and paying employees in cash, which is a very dangerous system,” Booker said.

Advocating for the same, Sen. Bob Menendez says it is better to have a “legal, transparent process” than a practice where cash rules the day because the money is unbankable due to pre-set banking laws.

The two New Jersey Democrat senators spoke at a seminar courtesy of NJ Spotlight in Pennington.

Booker is backing the Marijuana Justice Act, which advocates legalization weed and obliteration of possession criminal records while Menendez’s bill looks to lay down marijuana banking procedures.

Sen. Menendez condemned U.S. Attorney General Jeff Sessions, a pro-anti-marijuana activist a who at one time said, “Good people don’t smoke marijuana.”

Sessions has so far fought against legalization and any related efforts, even managing to reverse the 2013 Obama administration memo that begged for restraints on prosecution.

But marijuana banking activists and lawmakers still stand their ground.

“The Justice Department should now allow states that have decriminalized marijuana either for recreational or medical uses to operate,” Menendez said.

The Health Commissioner for New Jersey, Shereef Elnahal agreed that amending marijuana banking laws will broaden the marijuana marketplace, more so if New Jersey decriminalizes recreational cannabis.

“Obtaining capital is a major challenge for the medical cannabis dispensaries, and the existing laws only benefit the big players. So such reforms will diversify the market ensuring local entrepreneurs get support as well,” said the Health Commissioner.

The group declared to go up against Trump administration attempts to “weaken the Affordable Care Act.” The bill could be a bone of contention in the oncoming New Jersey congressional campaigns.

Elnahal announced that New Jersey would publicize the individual market and erect a command center to assertively advertise the next Obamacare enrollment period notwithstanding federal funding cutbacks to healthcare providers.


California Cities Unprepared for Legal Recreational Cannabis Sales Jan. 1

Marijuana Business FundingThe long-awaited day is right around the corner, but California is not as prepared as it should be for the start of recreational marijuana sales on January 1st. Both Los Angeles and San Francisco are struggling to put together local rules for cannabis shops and growers. The problem is that a delay in regulations could lead to limited options in many areas. This would be incredibly unfortunate, considering how many consumers are eager to ring in the new year with a legal cannabis purchase.

Thus far, California plans to treat marijuana like alcohol. Individuals 21 and older will be permitted to possess up to an ounce and grow six marijuana plants at home. On Jan. 1, the newly legalized recreational marijuana sales will be merged with the state’s medical marijuana market, which is experiencing stronger regulation. Recently published plans to regulate the two-decades-old medical marijuana market are the first since it was legalized.

This proposed plan details the standards for marijuana merchants that wish to be licensed by the state. The rules range from how late these cannabis shops can stay open to how much they will be allowed to sell each day. The final rules should be in place in time to start issuing licenses by January 1st – just in time for the rollout of legal recreational marijuana purchases.

While it sounds like things are moving steadily forward, there are some holes in the system. Specifically, how the cannabis will be moved from the field to distribution centers, on to testing labs and finally arriving at the retail shops themselves. The licenses to be issued in January are temporary, and plans have not been released on how the estimated $7 billion marketplace will be governed.

Obviously, a big problem considering the state is expecting to see as much as $1 billion in the first few years. Operators are concerned that this delay in nailing down the details could cause serious conflicts in various rules and laws to pop up down the road.

According to The Cannabist, “The state expects businesses that receive licenses will only work with others that hold them. But that has alarmed operators who wonder what will happen if their supplier, for instance, decides not to join the new legal market.”

Another huge obstacle for marijuana operators is that banks still refuse to work with them. Under federal law, marijuana remains very much illegal. As a result, these merchants have turned to alternative providers like Marijuana Merchant Account for their business funding and payment processing needs. Unlike their experience with a bank, merchants can secure the services they need with MMA in as little as 24 hours with minimal documentation requirements.

Meanwhile, Jan. 1 is fast approaching – ready or not. Cara Martinson of the California State Association of Counties recently admitted, “The bulk of folks probably are not going to be ready Jan. 1.”


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.


Lessons from the Business Executive – Marijuana Business Funding

MarijuanaThere’s a reason why people like to say “been there, done that”. Someone who has learned how to handle a situation, or a business, has done so with a lot of trial and error. Yes, some things were figured out easily. But a lot of things in life, and in business, are learned the hard way. For those who have experienced success in the marijuana industry, there is no exception.

Thoroughly understand the concept of margins and gross margins

If you sell $100,000 worth of products and your cost for those products is $65,000, your gross profit is $35,000. Your gross profit margin is 35 percent. Thus, to find your gross profit, you subtract inventory costs from sales.

When making purchases for your store, you need to consider the cost of those products along with gross margins. In order to make wise purchases, you must consider approximately what margins you need to make based on your sales and expenses. In balancing your inventory with a combination of higher and lower margin products, you can achieve some flexibility.

Keep in mind that lower margin products can sometimes bring prestige to your store. Highly valued and sought after strains of cannabis also means that growers will charge more for pounds. In order to offset these lower margin products, a business can buy some less expensive, higher margin product.

Obtain and Maintain the Right Inventory

One of the most important aspects of successfully running a marijuana dispensary is having the right inventory; this also involves choosing the right inventory manager. They must be a real weed “geek” in that they can recognize strains and subpar trim jobs. Years of experience and a passion for the job are involved in acquiring such a skill set.

A good inventory manager must also know the market. What strains are currently the most sought-after? What new products are up and coming?

The optimal inventory will change from state to state, area to area, and shop to shop. Whether the inventory is recreational or medical based will matter as well. One fact is true across the board – the right mix of flower, concentrates and edibles is essential.

Overcome the banking challenges of the industry

Banking has and continues to be one of the biggest challenges for the marijuana industry. Although the acceptance of cannabis has come a long way, it is still illegal on the federal level. As a result, banks tend to turn and run the other way.

If you find a bank in your state willing to work with you, jump on the opportunity. For the majority of businesses however, this is not the case. It goes without saying that operating in cash is simply inconvenient and incredibly unsafe.

To find solutions tailored to the industry and to avoid operating in cash only, businesses are turning to high risk providers for their marijuana business funding needs. High risk processors specialize in working with industries considered high risk. Their application processes are also simple, fast and hassle-free. Basic documentation is required, unlike the endless red tape you will likely experience with traditional institutions.

Take advantage of the information from those who have “been there, done that”. Maintaining the right inventory, watching your margins and securing business funding will strengthen your business. Don’t let mediocre inventory and banking challenges hold you back.

Contact us for Marijuana Business Funding Today!


Setbacks for Marijuana Banking Shows Need for Federal Change

480007355There 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


Banks Remain Wary of Marijuana Businesses as Alternative Payment Processor Step In

Marijuana and Dollar notesBanks have historically been mostly unwilling to work with different state-legal marijuana dealings across the US. Their cageyness has been founded on the fear of being implicated as cash launderers. This has traditionally forced marijuana-related businesses to trade exclusively on a cash-only basis, which always comes with some risks. It puts both the venders’ as well as the buyers’ safety at risk of being subjected to burglars.

Following the government’s gesture towards a free marijuana economy, some banks in the US are now opening their doors to businesses related to marijuana across the nation. They have however shown considerable caution in their acceptance of these business dealings. They remain wary of the dealings. Some of them have conversely continued to shutter the accounts run by marijuana businesses that’s presenting the marijuana merchants with challenging medical Marijuana payment processing across the country.

As a result, it encourages auxiliary account service providers such as MMA to step in and offer payment processing services to Marijuana dealers.

Details from a New Report

A new report from the Treasury Department’s Financial Crimes Enforcement bureau obtained by Dynamic Securities Analytics, a financial regulatory analytics firm now presents information regarding the undercurrents of the marijuana-banks relations over the recent business period.

The reported data reveals that financial bodies in different US states have filed over 1,700 reports on marijuana-related businesses in compliance with the FinCEN guidance. The guidance present details to direct the activities of the banks as they deal with marijuana related businesses. According to the report, this is the number of businesses being offered traditional banking services.

The businesses are said to be in full compliance with federal guidance and their various state laws according to the banks.

The FinCEN guidance directs that banks working with state-legal marijuana traders must report their undertakings in a report termed “suspicious activity (SAR)”.

The SAR has three classifications namely ‘limited’, ‘priority’ and ‘termination’. If a bank files the ‘limited’ SAR, it means that they are working well with the businesses related to marijuana and the businesses have not shown any evidence of violation of state laws or federal guidance.

In the recent report, over half of the total number of SARs reported (3,157) were classified as ‘limited’. Nearly the same number of banks are also said to be filing the ‘termination’ report. This means that they are quitting services extended to the marijuana related businesses.

This is their way of maintaining compliance with federal rules on money laundering programs. A total of 313 SARs filed were of the “priority” classification. They are banks that believe the marijuana businesses they are working with may have been in violation of certain state laws or the federal guidance.

Contact MMA for Medical Marijuana Payment Processing Solutions Today!