If there is one industry on our wish list for offering e-commerce merchant accounts, it is undoubtedly the marijuana industry. We currently have solutions for all things related such as hemp and CBD (we hope to have a solution for medical marijuana in a matter of weeks), but payment processing for the cannabis industry has eluded payment service providers.
We keep seeing glimmers of hope, however.
Recently, a Massachusetts credit union declared in a Boston Globe news article that it was prepared to provide marijuana merchants banking services beginning in October. Many U.S. banks have also declared such, only to encounter road blocks, such as the federal reserve. The credit union in question, however, already has the backing of the Massachusetts Cannabis Control Commission, which is assisting with a process called seed-to-sale tracking, a software program designed for cannabis merchants to maintain compliance for state laws.
The MCCC also said it is also in talks with several other Massachusetts banks and credit unions.
The good folks here at Instabill are closely monitoring developments, as our home office practically borders the state line between New Hampshire and Massachusetts. It leaves us to wonder if Massachusetts could be the ‘litmus test’ of sorts for successful marijuana banking.
We’ve long waited to see which banks might be the first to offer banking services for the marijuana industry (and we’ve blogged about the possibilities of e-commerce merchant accounts for marijuana ad nauseam). Quite possibly, it may be a tiny credit union (with merely 11 locations) in central Massachusetts.
What is the problem with cash transactions?
As a provider of e-commerce merchant accounts, we’re favorable to credit and debit cards since they keep our company doors open. Payments experts attest that cash may be on the outs by 2030 in favor of credit cards and mobile payments, but we think there will always be a place for cash transactions.
Herein lies the problem with the cannabis industry: when a business is dealing with multi-daily cash deposits of thousands upon thousands of dollars, the possibilities of foul play increase dramatically:
- Money laundering: With cash, money laundering is rather easy because there is no paper trail. For example, in the states where recreational marijuana is legal, cash-only transactions could enable a narcotics dealer to distribute much more potent drugs than marijuana, easily working under the guise of a dispensary. With credit card processing or an ACH solution, every transaction is accurate and on record. There is a money trail. Figures are exact. The chances of nefarious behavior decrease.
- Security: When the first states began legalizing recreational marijuana, the dominant problem they encountered was the transportation of the large amounts of cash to banks for deposit. It wasn’t safe then, and it hasn’t changed. Many dispensaries have resorted to hiring armored truck services who are making two and three retrievals and deliveries each day — a significant expense in itself. Additionally, those marijuana merchants who make only one deposit a day, and are holding large amounts of cash all the while, leave themselves wide open for robbery.
A (improbable) theory about marijuana
Though marijuana is legal for recreational use in nine states and the District of Columbia, it remains illegal by federal law because it is categorized as a Schedule One drug, alongside the far more dangerous and addictive drugs are such as heroin and LSD among others.
Marijuana proponents claim hypocrisy: addictive prescription drugs OxyContin, Percocet and Demerol — arguably far more addictive than marijuana — are classified as Schedule Two drugs.
If marijuana was classified as a Schedule Two drug, would that quell the feds hesitance in allowing banks to offer e-commerce merchant accounts? We’re curious as to what the procedure might be for declassification, as well as its impact on banking for marijuana.
E-Commerce merchant accounts for marijuana: We’re waiting…patiently
While the marijuana industry remains in a state of limbo, we’ve long offered e-commerce merchant accounts for related products, such as CBD and hemp, kratom, as well as nutraceutical and online pharmaceutical businesses.
We urge all prospective high risk merchants to have a conversation with us first, enabling our merchant account managers to get a feel for your business. Our merchant account experts are available directly at 1-800-530-2444 Monday through Friday, from 8 a.m. through 6 p.m. Inquiries received after hours will be handled the very next business day.