The cannabis industry has enjoyed seriously swift growth and there is no sign that it is slowing down anytime soon. This growth has had a positive effect on many other businesses and industries that are needed and support it. These companies are called ‘ancillary’ businesses, or cannabis-related businesses (CRBs) and the industry can't survive without them. But these cannabis-related businesses can’t survive without payment processing to accept payments for their services.
These supporting businesses include everything from farming supplies to testing labs, from packaging suppliers to textiles, and everything in between. All of these companies have had to step up their game an produce the goods needed by the industry.
If there is one thing that is slowing it down it’s the lack of banking and payment processing services. By now we are all pretty aware of how difficult it is for cannabis companies. Their lack of access to banking, being unable to accept credit card payments and being forced to operate in all cash is common news, these days.
Banks leery of providing cannabis-related businesses with payment processing.
Unfortunately, other seemingly normal businesses are also judged for doing business with or supporting the cannabis industry? It’s understandable, under Federal law, why banks might be concerned about working with someone dealing with an “illegal” substance. But they are persecuting businesses who are not even touching the plant. The cannabis industry, just like any other industry, needs access to various supporting trades to conduct business. Businesses such as cannabis lawyers, consultants, trade show organizers, T-shirt makers, label and packaging suppliers, and many more. Normal everyday companies and business owners who offer their services to all kinds of business models. But they still have to think twice when offering these same services to a cannabis business.
This industry resides in a very challenging legal environment. They must have the help of an attorney to make sure they are ready for long term regulatory compliance. Every state has its own unique set of state, county or municipal regulations that a cannabis company must abide by. It is imperative for a business operator to hire a consultant to help navigate all state compliance regulations and remain that way as time goes on. There are companies that specialize in packaging, people who organize trade shows for various different trades, and ad companies that help businesses with marketing. The list goes on and on. These businesses, like any other service, are just trying to lend their services to their customers. But because their customer is viewed as illegal, they are guilty by association. It can be very difficult for cannabis-related businesses to secure payment processing to accept credit card payments.
The SAFE Act won't necessarily make it easier for banks to provide payment processing to cannabis-related businesses.
The upcoming SAFE Banking Act may help. The Secure and Fair Enforcement Banking Act of 2019 intends to address issues companies face when securing financial services. The goal per the Congress website is “To create protections for depository institutions that provide financial services to cannabis-related legitimate businesses and service providers for such businesses, and for other purposes.” The House passed the Bill on Sept. 25, 2019, and has forwarded on to the Senate for consideration.
Access to payment processing for ancillary businesses has actually gotten harder.
While it is true that cannabis-related businesses have been treated unfairly, they are still able to get a merchant account. And, it is possible to legally accept credit cards when you have an experienced high-risk merchant provider. Services like cannabis lawyers, consultants, trade show organizers, T-shirt makers, pipe stores, vaporizers, packaging manufacturers, and just about anything else associated directly with the industry can accept credit cards legally and transparently if they go about it the right way.
Following Federal and State regulations, where cannabis business is concerned, is like walking a tight rope. Banks won't risk upsetting investors or worse aiding an illegal and illicit drug trade(in the Feds eyes). Many banks feel they can't abide by the Federal and Card Brand laws and still provide these industries service. Or, they just won’t incur the expense required to comply with Federal SARS reporting in order to service ancillary businesses.
You must have an MSP who specializes in cannabis industry payments.
This is where having a high-risk merchant service provider (MSP) who specializes in cannabis payment processing will pay off tenfold.
Many companies claim they do high-risk merchant accounts, but it doesn't mean they understand the unique troubles of the cannabis industry. To get an ancillary cannabis business merchant account you need an MSP with broad experience with high-risk merchant accounts. A company that also understands the cannabis industry itself, and the unique problems it provides. One who has forged the proper banking partnerships to service your business legitimately.
For cannabis-related businesses, it's about more than just bank statements and creditworthiness to secure payment processing. Underwriters will be scrutinizing your entire business model. An MSP that understands the cannabis industry will be able to coach you on how to set yourself up for success from the beginning. For instance, an educated MSP will be able to help you audit your website for red flags. They will be able to advise you as to what your online presence should look like. And what it definitely should not include.
High-risk merchant accounts are a lot more strict and this can make them a bit labor-intensive. An experienced MSP will coach you regarding the proper documents you need from the start. You do not want the underwriter to have to keep asking for additional paperwork over and over again. You're much more likely to get approved when you have all your ducks in a row from the beginning.
There is no more important time to have a reputable, educated, and transparent merchant provider.
Bankcard International Group is a proud supporter of the cannabis industry. We have solid solutions for cannabis-related merchant accounts. We pride ourselves on fighting for domestic and transparent solutions for our clients. Have questions? Give us a call today. Allow one of our ETA -certified payment professionals to advise you as to the best solution for your ancillary cannabis service.