Every month, many marijuana companies across the U.S. have to move physical cash from their premises in order to pay for utilities and other needed supplies and this is a common practice among marijuana businesses. Although marijuana is legal in most states in the U.S., banks that are federally insured have prohibited the opening of accounts for cannabis businesses. This is because they are afraid of being accused of criminal activity since federally, marijuana is a controlled substance under Schedule 1 of the Controlled Substances Act.
The refusal of banks to conduct business with weed businesses has left them with no alternative but to operate on a cash basis. For example, NUG is licensed to cultivate and manufacture marijuana products in its facilities in California, and since it cannot deposit the money in the banks, the only way to safeguard it is to keep it in locked vaults.
The founder and CEO of NUG, John Oram, said that the company headquarters is set up like a casino as it has vaults and electric notes counters. He also noted that a minimum of two employees must be present when a transaction is taking place. Oram further said that the company hired armed guards for cash deliveries from the dispensaries and the guards are also cautioned to switch up their routes to avoid predictability. NUG has 200 employees who are paid in cash. Taxes are also paid in cash.
Oram is hoping to start working with Pacific Banking Corporation to alleviate transacting on a cash basis. Some of the methods marijuana business could use to avoid operating on a cash-only basis include:
PayQwick was formed by two attorneys, and it functions like PayPal. Businesses and customers deposit money into a system that allows them to transact back and forth. It also permits money transfers to and from banks. Farmers can use the app to pay for seeds and soils, while customers can pay for products at the dispensary. The app allows the transfer of money across state lines and takes on the responsibility of federal compliance, such as due diligence and compilation of suspicious activity reports.
CanPay is a mobile debit app that is widely used by marijuana retailers and businesses. Customers do not pay extra fees upon making a purchase, and customers can only transact at a maximum of $250 per day. Every time a purchase is made, the same amount is debited in your checking account. Currently, 400 medical and recreational marijuana businesses are transacting using the app.
Hypur provides banking institutions with a legitimate way of transacting with highly regulated industries, such as the marijuana industry, through an electronic app. Hypur matches cannabis businesses with banks or credit unions since it has every detail about the financial institutions.
Dama Financial has a network of all banks that are insured by the FDIC that are interested in transacting with marijuana businesses. The business looking to work with the bank must fill in an online application and agree to an on-site inspection. Once approved, Dama manages the company’s banking services, and this includes transportation of cash to the processing facility and receiving the deposits via ACH wire. The money is deposited in the company’s account the following day.
Local Banks and Credit Unions
Some small banks are open to conducting business with well-organized weed businesses, although many are still wary of marijuana businesses. You can therefore do your homework and find one of these small institutions that can accept your cannabis business as a client.
These options should ease the pressure on marijuana entities like The Green organic Dutchman Holdings Ltd. (TSX: TGOD) (OTCQX: TGODF) and Green Hygienics Holdings Inc. (OTCQB: GRYN) who may need backup arrangements in case banks pull the plug on them.
CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.
To receive instant SMS alerts, text CANNABIS to 21000 (U.S. Mobile Phones Only)
For more information please visit https://www.CNW420.com
Do you have a questions or are you interested in working with CNW420? Ask our Editor
CNW420 is part of the InvestorBrandNetwork.