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Education

ISOs can be banking trading partners on a cash-only basis, and to hire armed
guards to protect their businesses and customers from
conduits for cannabis criminals lured by the cash nature of these businesses.
There is an obvious need for electronic payments, and
some good options are available in the market. These
businesses include cashless ATMs (sometimes referred to as point-of-
banking systems) for PIN-authorized credit and debit card

By Max Miller acceptance at retail locations, and electronic check and
ACH payments for ecommerce and business-to-business
Paybotic transactions. Retail payment acceptance solutions also
need to incorporate options like mobile payments and
uch has been written about unbanked digital wallets, as well as changing channel preferences,
American consumers. But what about such as online ordering for curbside payment and pickup.
unbanked businesses? Thousands of U.S.
M businesses are routinely turned away by Cash advances are viable alternatives to conventional
banks and credit unions, for one simple reason: the can- bank loans for cannabis businesses, and a way for ISOs
nabis products they handle and/or sell, while sanctioned and merchant level salespeople to leverage existing card
by state law, remain illegal under federal law. It’s not just processing services to enhance revenue opportunities.
cannabis dispensaries, either. Farmers who grow canna- Look for a cash advance partner that is comfortable with
bis, state-authorized labs that test cannabis for safety and and can demonstrate high approval rates for cannabis
potency, distributors—even companies that sell related businesses. Opportunities also exist for providing
products, like CBD oils—find themselves shut out of the safe, cost-effective solutions supporting the legal
banking system. transportation and depositing of cash into the banking
system. Remember, while most banks and credit unions
Fortunately, a new breed of financial technology firms shun cannabis businesses, nearly 700 have put in place
has emerged to seize on this market opportunity, building policies and procedures that meet regulatory requirements
modern platforms that address the unique financial for accepting cash deposits from and providing related
services needs of cannabusinesses. services to these businesses.
$16 billion market and growing Qualities to look for

Legal cannabis businesses need access to modern financial Some fintechs have created platforms that financial
services such as credit and debit card acceptance, loans, institutions can leverage to board cannabis merchants
and depository services. Yet most credit unions and banks in ways that are compliant with various local, state and
don’t want the regulatory hassles of working with cannabis federal requirements, and are scalable also. ISOs can also
businesses. As of last June, just 695 banks and credit unions work with these fintechs to pair clients and prospects with
were servicing marijuana-related businesses, according to cannabis-friendly financial institutions. Look for a partner
the U.S. Department of the Treasury, which keeps tabs on that can provide support for:
marijuana-friendly banking through the Financial Crimes • Business checking accounts
Enforcement Network. This, despite the fact that the legal
cannabis market exceeded $16 billion last year. • Online cash management services
• Cash pickup and deposits
As millions of unbanked Americans have learned, you • B2B invoicing
don’t need to do business with a bank or credit union to
access modern financial services. Unbanked consumers • Escrow services
use many combinations of services from financial • Shopping cart integration
technology firms—prepaid debit cards with direct deposit
and online banking portals, for example—that often are • Inventory management
cheaper and better suited to their lifestyles. Having access • POS-ERP integration
to modern banking services, albeit from nonbanks, helps • Jurisdictional tax impound and payments
put unbanked consumers on a better financial footing.
The same can be said for businesses in the cannabis • Risk and compliance management
sector. Merchant services ISOs are well situated to help
dispensaries and other businesses in the cannabis value ISOs that can deliver on these needs will play a valuable
chain access modern financial services. role in helping cannabis businesses grow and succeed,
while building their own portfolios and residual streams
More than just payments on a growing industry.

It has been well-documented that the mismatch of federal
and state laws around cannabis sales has left many Max Miller is founder and CEO of Paybotic, a payment processing
cannabis businesses saddled with mountains of cash, with company specializing in high-risk businesses, including cannabis busi-
nowhere to deposit it. Most are forced to transact with nesses. Contact him at max@paybotic.com.
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