The inauguration of President Donald J. Trump left the legal cannabis industry feeling, to be frank, shook as hell. And even now, more than three months into Trump’s America, the weed world seeks stability as feelings of uneasiness abound.
In the time since Attorney General Jeff Sessions and Press Secretary Sean Spicer suggested the possibility of a federal crackdown on states with recreational marijuana programs, the financial fallout has ranged from stalled investments into weed businesses, to cannabis-ancillary firms having their accounts suspended or being outright dropped from their financial services providers and payment processors. The uncertainty of how Trump’s administration will utilize federal resources to police legal pot––or potentially dismantle the industry state by state––has many in the legal marijuana sector at a standstill.
But even if the retail and recreational use of cannabis were to become legal at the federal level, or if marijuana were rescheduled by the DEA, the cannabis industry would remain a high-risk business space, according to Hypur COO Michael Sinnwell.
Scottsdale, Arizona-based Hypur offers an electronic payment system that “enables U.S. banks and credit unions to safely and profitably serve cash-intensive businesses through banking and payment technology designed specifically for highly regulated industries,” such as marijuana.
Acquiring an account with mainstream financial service providers is difficult for marijuana businesses but not impossible. Holding on to that account, however, has proven to be an exercise in exhaustion. In January and February of this year, dozens of marijuana companies––some that touch the plant, and even technology companies operating in the space––were reportedly dropped from PayPal, Square, and Stripe.
“Since the first quarter of 2017, it’s been a slow progression backwards and it feels like we’re going in the wrong direction,” Mark Falcone, co-founder of edible potency testing company tCheck, said to Inc.
Falcone’s tCheck has been dropped by PayPal, BitPay, and other financial service providers––most of which rely on the networks of Visa and Mastercard in order to operate, and risk getting blacklisted should they do business with members of the cannabis industry or other high-risk sectors.
“It’s only when an account shows more than $20,000 in sales that these processors take a second look,” Roger Volodarksy, founder of Brooklyn-based vaporizer maker PuffCo, told Inc.
“The industry needs to work honestly with financial institutions,” Sinnwell said to KINDLAND.
Any electronic transfer of funds made using Hypur’s in-network platform have gone through an enhanced due diligence process with the finance sector to make sure that both merchants and their local financial service providers aren’t breaking federal law. Consumers create a profile, which is linked to their checking account in order to verify identity and available funds, and merchants hold accounts with Hypur that are also linked to the local financial institution with which they do business. Should a consumer make a dispensary purchase using Hypur, the money will be in the retailer’s account within a few hours.
“We don’t sit on anyone’s money or stop it in transit, and we don’t use any third-party system,” said Sinnwell.
Traditional financial institutions (think banks and credit unions) also maintain apprehensions when it comes to working with cannabis businesses. That’s because banks risk catching federal money laundering charges per the Banking Secrecy Act should they choose to work with weed enterprises.
“In essence, banks view dispensary owners, or the industry at large, as possibly having connections to the black market,” Lamine Zarrad, who founded Tokken, a cannabis fintech startup whose signature product operates on the blockchain ledger, previously said to KINDLAND. “For example, say there is a grower that has been in the industry for 20 years in an illegal capacity. Now they’re legal, but they’ve made those nefarious connections––the bank is going to turn them away, because it simply cannot know the risk that this person represents,” said Zarrad.
In response to the weed world’s banking problem, a series of bills have been recently proposed that, if passed, could offer some form of protection for organizations that associate with marijuana businesses and legal weed dealers. In California, Rep. Dana Rohrabacher (R), in conjunction with a bipartisan group of congressmen, proposed the Respect State Marijuana Laws Act, which would offer immunity to banks that interface with the cannabis industry.
This legislation couldn’t come sooner. The federal line of thought that all weed-adjacent activities are pursuits in criminality is arguably out of step with public opinion. In Alabama––the home state of Attorney General Sessions––a readers poll conducted by AL.com showed 78 percent of the state is in favor of state-regulated legal marijuana.
Startups in the quasi-legal marijuana industry must routinely find workarounds in order to process payments.
“When we first started FORIA, retail orders on our website would be redirected to pay for the product by using Venmo. This process was in place for several months. Our account––which we listed as a sexual wellness brand, which we truthfully are––was eventually shut down by Venmo when they realized that we’re also a cannabis brand,” FORIA’s marketing head Brittany Confer tells KINDLAND.
FORIA has since resolved this issue (at least temporarily), but the maker of cannabis-infused sexual wellness products isn’t alone in having to do so.
For now, while the green-gold rush goes down in the less-than-happy medium between legitimacy and criminal enterprise––and as the Trump administration determines just how hard, if at all, it will come down on legal cannabis––each and every day spent in the weed world means more money, more problems.
This article originally appeared on TheKindland.com.