LAS VEGAS — How difficult is it for marijuana businesses to maintain relationships with mainstream financial institutions? Just ask Jon Levine.
Levine is chief financial officer for Newton, Mass.-based MariMed Advisors, a consulting company to the cannabis industry that has nothing to do with growing, transporting, selling or otherwise distributing marijuana.
But in the last two years MariMed has had to switch banks three times. "I have been working with financial institutions to educate them about the deposit forms," Levine said during the recent Marijuana Business Conference here. "The new paperwork reporting is not that bad. The Fed has not audited any bank in Rhode Island that we have worked with."
While Levine said conditions are "getting better," he hopes credit unions will step up and offer services to dispensaries and other canna-businesses. "This is a real industry now," he noted. "Credit unions should be comfortable taking deposits."
Besides the obvious public safety issue of marijuana dispensaries having bales of cash on hand, there is an overlooked tax issue, according to Levine: Colorado canna-businesses are not allowed to pay their state taxes in cash. Some marijuana businesses have tried workarounds to the cash conundrum.
Several of the exhibitors at the Marijuana Business Conference offered solutions that collected and accounted for cash, while others offered access to plastic cards.
Mark Sicola, president of Cannabis Merchants, said his company has strategic partners that are working with banks in several states. "Our solution works with debit cards only, with no cash back," Sicola explained. "No credit is extended. The merchant pays the fee, so there is no charge to the patient. We designed a processing system from the ground up because we want to make the bank feel comfortable." Cannabis Merchants also has created pre-paid, branded gift cards that merchants can offer to their customers, Sicola noted.
Toronto, Canada-based Budbank.com also uses the authentication angle — verifying the identity of those holding marijuana prescriptions so those patients may use some plastic cards for purchases. Jonathan Imm, director of operations of Globility Link, which works with Budbank, said the system is for PIN-based credit only, not Visa or Master Card.
Pay Teller of Boca Raton, Fla., tries to help dispensaries comply with Fincen guidance on marijuana banking. Howard Goldberg, the company's national director of sales, said Pay Teller's process is a "tool" that aids dispensaries.
"If a dispensary can ensure all funds are accounted for, it is less likely to come under government scrutiny," he said. "We make it so cash does not change hands from one human being to another. After we validate the ID and the age of the purchaser, the cash goes into a secure box. In Colorado, the cash then is moved by a security company to a financial institution — the dispensary employees have no access to the money."
With this system, Goldberg said FIs can file their required Suspicious Activity Reports related to marijuana businesses with the assurance they are "100% compliant."
"We work with dispensaries to get them relationships with financial institutions," he said. "Credit unions can get involved, as long as they do serious due diligence when taking on such a businesses. They have to make sure the dispensary keeps a close eye on sales."
C4EverSystems said it is working with Agrisoft Development Group to create a tool that tracks marijuana from seed to sale. Agrisoft's tracking solution focuses on the product from growth to distribution, while C4EverSystems has developed public-facing kiosks that handle transactions at dispensaries.
