Every cannabis business wants to accept credit cards. Like any ‘normal’ business, this would streamline business processes and enable the companies to operate more efficiently. Unfortunately, they can’t.
The overall reason for this is that the risk falls on the bank. Since marijuana is a schedule one substance, it’s illegal for financial institutions to accept proceeds from any marijuana sales. Rather than risk their FDIC insurance, financial institutions choose to simply not do business with them.
Many businesses have resorted to storing massive amounts of cash on hand. I once heard of a business that was sitting on over five million dollars in cash in a back room, with its owners having no idea what to do with it.
In recent events, seven more states have legalized cannabis and nine senators (including Elizabeth Warren) have been pushing to pull cannabis business out of banking limbo.
If these senators are able to push through and get the federal government to provide guidance on banking best practices, I believe we will see an exponential growth in the marijuana business. An MIT study suggests that people are willing to spend up to 100% more when they can pay with credit. The cannabis space is already projected to be a 50 billion dollar industry, and that’s based on estimates that have been forecasted by its current cash-only environment in 28 states. Once banks get involved in credit card processing and business loans, we might see an even larger forecast in a major industry.
Wil Ralston is the Vice President of Sales and Marketing at SinglePoint (OTCMKTS: SING), a publicly-traded cannabis holding company specializing in acquisitions of small to mid-sized companies with an emphasis on mobile technologies.