- Legal environment for cannabis businesses remains uncertain
- Main Street banks and big tech avoid the cannabis space
- Leaving opportunities for fintech companies
Reluctance by Main Street banks to provide traditional banking services to cannabis establishments has provided a cornucopia of commercial fare and opportunity for financial technology companies like Medical Cannabis Payment Solutions (OTC: REFG). The company is now offering ‘Green’, a FinCEN-compliant payment processing system for state-licensed cannabis establishments. Through the Green platform, patients are able to link their bank accounts and debit those accounts to purchase cannabis. Presently, most cannabis dispensaries are unable to obtain payment processing services from their banks or the major card networks, such as Visa and MasterCard, so sales are typically transacted with cash. This adds extra costs for security and exposes dispensaries to robbery and other risks. The Green platform obviates those perils. It also comes with money management functions that handle payroll, payments to vendors and much more.
Things are not getting any easier for cannabis dispensaries. In June, the Senate Appropriations Committee voted down an amendment that would have protected financial institutions that open accounts for state-compliant cannabis businesses from punitive action by the federal government (http://nnw.fm/lZk6E). A week earlier, the House Appropriations Committee tabled a similar measure (http://nnw.fm/o9sTw). Now, since Attorney General Jeff Sessions rescinded the Cole Memo on January 4, 2018, the only legislative bulwark for cannabis left standing is the Rohrabacher-Blumenauer Amendment, which is up for renewal this month (September 2018). Such a capricious and ambivalent environment has acted as a wet blanket on any desire that Main Street banks may have developed for banking marijuana dispensaries. Data from FinCEN shows that, in March 2018, only 411 depositary institutions in the U.S. (out of more than 5,000) reported that they were doing business with cannabis establishments.
Banks are not the only entities affected by the uncertainty. The great tech companies like IBM are keeping their distance from cannabis, too, as American Banker has observed (http://nnw.fm/A1jtV). This presents an opportunity for smaller fintech outfits like Medical Cannabis Payment Solutions who won’t find themselves competing against organizations with much larger resources. They can fill the vacuum and get time to grow, learn and adapt, before the legal environment changes and the tech giants make their entry.
Cash is good; it’s anonymous, costless, and convenient, but it’s also “great for organized crime… great for money laundering… great for theft and larceny… great for cheating on taxes… (and) great for cheating on your payroll,” Sen. Jeff Merkley (D-OR), who sponsored the Senate amendment, stated during a hearing. For cannabis dispensaries, too much of such a good thing may expose them to unwelcome attention and other hazards. With the electronic transaction processing features of the Green platform, robbery, theft and other threats can be avoided. With it, cannabis cash problems can be solved.
Green allows a dispensary to take electronic payments and deposit cash securely, all in complete FinCEN compliance. Merchants can open an account on the company’s website by completing a Dispensary Merchant Application (http://nnw.fm/3M7qh). Using the system, dispensaries need not worry about regulatory issues, since FinCEN compliance is incorporated into the transaction processing platform. Medical Cannabis Payment Solutions keeps customers in compliance and retains the necessary records to prove that. The company is a Level 1 payment processor certified by Visa, MasterCard and Europay. The Green platform is expected to find widespread application, as it integrates with most shopping carts and POS systems. Presently, it is processing roughly 60 million transactions per month.
For more information, visit the company’s website at www.Take.Green
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