Marijuana Banking Update
As of this blog, nine states and Washington D.C. have legalized recreational marijuana—Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, Vermont, and Washington. Medicinal marijuana is legal in another 29 states.
While weed is gaining momentum, there’s a lack of financial institutions to support the blossoming industry.
Unfortunately, cannabis businesses are forced to operate under the table, mimicking black market behavior.
In California alone, officials estimate the marijuana market is projected to grow to $7 billion annually by 2020.
An article by Patrick McGreevy in the April 19th, 2018, edition of the Los Angeles Times, reported California anticipates collecting $600 million in marijuana business taxes in 2018.
That’s a ton of money to transact without banks.
The reason why banks balk at doing business with cannabis companies is that the federal government classifies pot as a Schedule 1 drug—which means marijuana has no inherent medical value. Since the banking industry is federally regulated, the financial institutions don’t want to risk their business to legal liabilities, including criminal charges and money laundering.
As a result, marijuana business owners are forced to carry cash-stuffed duffle bags to pay their bills. This situation raises an enormous public safety issue for potential robberies. And keeping cash-only receipts in the stores creates enticing opportunities for thieves.
In April, President Trump opened the door for financial institutions when he indicated his administration would not crack down on recreational marijuana in states that have voted to make it legal.
A Safe-Payment Processing System
Senator Bob Hertzberg of California, D-Van Nuys, introduced bill SB 930 that would enable financial institutions to conduct transactions with cannabis companies.
The legislation would create a new, limited-purpose state charter for privately financed banks under a program that would be managed by the State Department of Business Oversight.
Pot companies would be able to deposit money in state-licensed banks, which would enable marijuana businesses to pay their rent, employees, state and local taxes, fees, and vendors. Banks would be privately insured instead of federally insured, and federal regulators would have a guarantee the money is monitored for tracking, oversight, and transparency.
On April 18, 2018, the San Francisco Chronicle reported that SB 930 was approved by the state Senate Banking and Financial Institutions Committee. The measure progressed to the Senate Appropriations Committee, which would have to pass it before it could proceed to the full Senate for a vote.
Acquaintances have told me about a few financial service companies that support the marijuana industry, but I’m not familiar with them.
So, out of curiosity, I Googled Cannabis Banking and Payment Solutions and found several options. The following three businesses seemed interesting, so I copied their descriptions from their websites.
Weed Pay is a cannabis banking and merchant services company. We think differently than conventional credit card processing companies due to our history of handling high-risk accounts. We are experts in the field of alternative payment options, merchant accounts, and banking. Our mission and vision are to provide needed customer support services to the cannabis industry within these areas.
PayQwick’s mission is to bring well-established, proven payment processing, regulatory compliance and, banking services to the licensed recreational and medical marijuana industries, thereby reducing the risk of violent crime, illegal money laundering and violation of state marijuana regulations. PayQwick serves state licensed Producers, Processors, Wholesalers, Distributors, Dispensaries and Retailers.
At Cannabis Cash Solutions we specialize in automating cash handling for marijuana-related businesses. Our turnkey cash management system makes it easy to start protecting your investment today.
As I shared in my blog, Skin in the Game, posted on October 17, 2017, I use CBD-based skin care products that are manufactured and sold in Long Beach, California. FYI: www.craveskincare.com–I highly recommend them. I spoke with the owner, Janette, and she is looking forward to utilizing banking services, including selling her products online with credit cards versus a virtual check. So am I.
Thanks for reading.
Are you aware of financial institutions that support pot companies? If so, who and where are they?
P.S. If you’re interested in reading my novel, Busted, which shows both sides of the drug debate, please click click on Amazon.