As a US merchant services provider, most of our attention has been focused on the goings on with our Canadian neighbors as well as the Cannabis World Congress & Business Exposition last week in Boston (which we’re attending) in hope that US merchant services are soon a reality.
With great interest, we’ll be watching how the marijuana industry in Canada unfolds as millions upon millions are hopeful the US soon decides to follow our northern neighbor’s lead. For us, legalization makes perfect sense, but there are several giant hurdles.
We think, however, what is happening up north will deeply impact the possibilities for the US.
3 things we’re watching for with Canada’s cannabis legalization
We’re curious to know if Canada’s legalization of marijuana will be the litmus test of sorts for the US to move toward legalization.
- How merchant services will be conducted: We put out a question on the online platform Reddit this week about how Canadian citizens are paying for marijuana now that it was legal. We received responses from citizens of each province claiming credit and debit cards were the preferred method, but that cash was also welcome and abundant. If credit card processing for marijuana can work in Canada, it can surely work in the U.S.
- Online Sales: One recent commenter noted that marijuana sales were only available online in Ontario, through a government-run portal, and that Visa payments were not (yet?) being supported. We’re anxious to see how online sales play out this time next year. Some years ago, we proposed a government run credit union to enable US merchant services for marijuana, recreational and medical.
- The role of the government: As predicted, the Canadian government has mapped out a thorough legislation plan for recreational marijuana use. A few examples include:
- No minors in stores.
- Merchants prohibited from providing samples of products.
- In-store sales of marijuana are limited from 9 a.m. until 2 p.m. daily while online sales are permissible 24-7 (with delivery by adults to adults).
- Promotional activities by merchants are prohibited.
- Home cultivation limits four plants per household
Of course, oversight of several bylaws will be a challenge.
The two most important issues facing marijuana legalization in the US
For the US, the two issues regarding marijuana are intertwined:
- Legalization at the federal level
- A proper banking solution
The nine states and District of Columbia that have legalized marijuana for recreational use are all well-intentioned. But until cannabis is legal at the federal level, banks will remain hesitant to offer services for fear of being shut down by the feds. Thus, credit card processing solutions will remain, at best, elusive.
On one level, it is a shame, since proper banking infrastructure for marijuana would provide nothing but positives leading to enormous benefits:
- Significantly lower instances of the danger that the industry faces – namely, robbery and money laundering.
- Proper financial records and streamlining
A glimmer of banking hope
In late September, we blogged about a small credit union in central Massachusetts, GFA Credit Union, with plans to offer banking services to marijuana merchants within the state. GFA has the backing of the state’s Cannabis Control Commission and Safe Harbor, a Colorado-based company which underwrites marijuana merchants.
Several banks and credit unions have failed where GFA Credit Union is attempting to succeed. While cannabis proponents in Massachusetts are lauding GFA, the threat of a federal shutdown looms and could happen at any time.
US merchant services for CBD, hemp, etc…
While US merchant services for marijuana remains elusive, Instabill offers proven solutions for related products, such as CBD, hemp and paraphernalia. As the CBD and hemp industries are considered the highest of high risk industries, we (strongly) advise merchants to be diligent in providing the necessary KYC documents as well as:
- Proper identification of all business owners (license, passport)
- 3-6 months of business banking statements and credit card processing history (for startups, a comprehensive business plan and functional website detailing products)
- Sufficient capital behind the business is always a powerful quality in gaining an approval
Our merchant account managers are available at 1-800-530-2444 Monday through Friday from 8 a.m. until 6 p.m.
