Banking Alternatives For Marijuana Businesses

Cultiva Law, PLLC
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The allure of the cannabis business has cast its net long and wide over the entire nation. Some states are already seeing the revenue generated from marijuana sales reach into the billions. Still, banking within the cannabis industry remains a prickly issue. Despite a glimmer of hope on the horizon, marijuana continues to technically be illegal on the federal level. Because of this, banks are hesitant to do business with cannabis-related businesses, and businesses are left operating only with cash, which leaves them vulnerable to robberies. Thankfully, there are alternatives to traditional banking that can alleviate some of the common pitfalls of an all-cash business. Here are a few of the more prevalent services.

Cashless ATMs

Similar to a debit transaction, this method uses a countertop payment terminal to process an ATM transaction. At the business selling the cannabis products or services, the customer must select an amount to be withdrawn that exceeds the price of the product(s) that they are purchasing. Once the transaction is complete, the merchant then gives the customer the excess cash. The cost of the purchased product is then transferred into the merchant’s bank account after the sale. The customer will receive a receipt indicating that the transaction was processed as a cash advance.

Rent or Own ATMs

Probably the single most common solution is to have an ATM on site and have the consumer pull the money he needs for the purchase from an ATM that is located on site.

PayQwick

This app functions similarly to services like PayPal and Venmo. The difference is that PayQwick handles all compliance issues with banking regulations on their end, allowing its users to conveniently pay bills, send invoices, and transfer money electronically. PayQwick does the investigation necessary to ensure that its users are complying with state regulations and following all applicable anti-money laundering laws. Once it has determined that the compliance regulations have been met, the money can be used just as it would if it were held in a bank. There were some initial concerns regarding how PayQwick holds funds on behalf of their clients, but they have been up and running for years now without issue.

DAMA Financial

DAMA Financial operates by providing cannabis businesses a system of FDIC-insured bank affiliates that will do business with them. In order to use this company, your business first must be inspected through an intensive application process. Once accepted, DAMA will manage your businesses banking services by providing secure cash pickups and check or wire deposits. DAMA also provides a system to make payments to approved vendors and tax authorities via check or electronic payment.

Bitcoin

Bitcoin is a form of digital currency that has gained popularity over the last few years. While not entirely common, accepting bitcoin as a payment method eliminates the need for bank accounts and third parties to process payments. Through a marketplace, bitcoin can be converted into U.S. dollars. As its popularity continues to rise, bitcoin and other forms of digital currency may become a more viable option for cannabis-related businesses looking for alternatives to the hard-to-access banking industry.

Local Credit Unions And Banks

Not all institutions are unwilling to serve the financial needs of cannabis businesses. As more states legalize and begin to regulate the sale of marijuana, some small, local banks and credit unions have begun to manage accounts for marijuana businesses. Also, with the SAFE Banking Act making its way through Congress, more financial institutions likely will begin to re-evaluate their position and open up their doors to the cannabis industry.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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