While many of you in Cannabis already know, taking credit cards is a NO-GO when it comes to managing business and accepting payments. Whether a retail location or even an ancillary company providing services that don't touch/sell the plant, banking is made harder whenever you say, "We work in the Cannabis Sector."
FinCen, the governmental body that regulates the financial transaction through the US Treasury and works with Financial Crimes, has made it very hard for those licensed in their respective states to do banking on a Federal level. Why is this you ask? Well, because one main reason - Cannabis is still a classified Schedule 1 Narcotic and banking on any level is considered a crime because of that.
So recently, states started working with their local Credit Unions and smaller non-FDIC insured banks to work around the high levels of cash that moves through a cannabis business. Many of these banks added "cannabis" specific bankers and auditiors to handle the liability and reconcilation for each transaction - so as you can imagine, it means not all banks are open to cannabis expenses or liabilities.
As of First Quarter 2021, FinCEN released a "Marijuana Banking Update" that released the total numbers of Banking in the cannabis sector from 2nd QTR 2014 through 1st QTR 2021, and the numbers are staggering.
Total number of Banks vs. Credit Unions dipped upward through the 2019 year where we see a dip down through 2020 for banks, where the Credit Unions have maintained a slow, steady pace. So were does it end as far as numbers, well 2021 Qrtr 1 has a total number of 515 Banks and 169 Credit Unions.
That means the highest number of banking institutions was during November 2019, coming in at 747 combined and ending the year in 2020 with a total of 684!
So what do you with all that Cash? What do you do?
Diversify your payments with ACH and Debit
But how do you diversify if you don't have a legitimate banking route? Well, that is where the partnership or recommendation comes into play. Not only is that important but so is your licensing, ownership records, and background.
If you can prove business for 1 year, maintain valid licenseing in your state and provide business paperwork that is all in order, you can work with most Debit and ACH providers.
But what is the Difference between Debit and ACH? Glad you asked!
ACH stands for Automated Clearing House. Essentially, this allows you to accept an electronic payment as a bank-to-bank transfer for most retail and B2B payments.
Most ACH providers work with a series of local banks, depending on your state and can assist you through a warm introduction to setting up your banking so ACH payments are possible.
2. Debit Card
Debit Cards are pin-based and used in lieu of credit cards. A Debit card is a direct payment between the payee bank and the receiver bank. Also referred to as "check or bank cards," They are used to purchase goods or services through an ATM or Debit Card reader.
How to Choose the Best Payment Option For You?
In the cannabis industry, there continues to be an ever-growing range of business payment processors in the market. Many of them promising Credit Card Processing - DON'T DO IT! Steer clear of those companies, because no matter what they promise you, Credit Cards are NOT allowed in the Cannabis space, at all.
With PROTEUS 420 and over 13+ years in the cannabis software game, we build long-term relationships that are built on the quality of TRUST - COMPLIANCE - GROWTH and are now able to offer our PROTOPAY solution to all our clients and even those that aren't our clients, in the Cannabis space.
PROTOPAY brings legitimate payment solutions to your business with banking, ACH, and Debit card payments without the large cash deposit fee or mandatory bank partner. We have come to the table with TSYS approved payment options and can get you set-up in less than 30 business days due to our years of diligence and partnerships.
Don't leave your business in the hands of a possibility of payments - Contact US today to find out more, and;
If you’re looking for an adaptable, fully developed cannabis ERP, then look no further, Proteus 420 is a cloud-based ERP that gives cannabis operators the flexibility of a monthly SaaS (software as a subscription service) along with enterprise level capability.
Click Request a Demo now at the top of the page to learn more.