Believe it or not, Cannabis is one of the hottest industries currently. Whether you are operating a dispensary or any other pot related business, the cannabis industry is set to take off.
According to the Marijuana Business Daily, legal sales of marijuana are expected to grow to more than $20 billion by 2022. The industry is predicted to grow as big as e-commerce. Recent changes in the laws and regulations in certain states, has led to rise in marijuana and related products. It’s no wonder then that the multi-billion dollar industry is also seen as an excellent business opportunity for entrepreneurs.
Yet, the industry faces several difficulties when dealing with financial institutions. Merchants who own and run recreational shops, medical marijuana dispensaries or online stores selling marijuana products face many challenges from federal as well as major banks who refuse to co-operate.
Majority of the businesses are forced to accept cash as the only mode of payment with no way to secure credit card processing services or merchant account services. The lack of banks and credit card processors offering merchant services is a serious issue for the cannabis industry.
With cannabis treated as a control substance on the federal level, financial institutions view cannabis merchants as criminals thereby making it difficult for them to obtain any kind of banking services.
Top banks such as J.P. Morgan & Chase and Bank of America have a clear stance and outright refuse to be in any kind of association with the marijuana industry, stating they can produce enough profit by other means. Even though working with such a profitable industry is a huge benefit, the risks that banks have to undertake while providing services to marijuana merchants clearly outweighs the profit.
Consequences of operating a Cash-Only business:
With the world going digital, not only does transacting in cash-only creates operational problems but also leads to security issues. Besides merchant account, processors do not allow merchants to set up a payment processing system either.
With marijuana business netting in thousands and nowhere safe to store it, owners are highly vulnerable to internal theft, robberies, break-ins, and assaults. By being an easy target to criminals, businesses need to employ armed guards for their safety resulting in additional expenses for the owner.
Additionally, businesses also lose significant amount of sales by not offering alternative payment options.
Some merchants try to dodge and circumvent around by using merchant account services under false pretenses or hiding vital information from their processor. If caught, this can mean serious consequences for business owners. Your account will be shut frozen or you could be permanently banned from obtaining credit card processing services.
You will find plenty of online merchant account providers willing to accept your business easily and then deceiving you. Unclear laws on transactions as well as legal uncertainties make it difficult to guess who is legitimate or not.
Medical Marijuana/MMJ Merchant Account Solutions:
Whenever you are approaching a potential merchant account provider or are approached by one,
Check if the processor has experience and knowledge working in the cannabis industry &
Be transparent about the type of business you operate or the kind of products sell.
As long as they are in compliance to the law, Marijuana merchants need to be recognized as a legal & legitimate business just like any other regular store as well as have access to merchant account solutions.