Initiative 65 made Mississippi the 35th state to be able to legalize a medical marijuana program, and it will be funded by user fees. Accompanying this new industry in our state comes new territory of learning how to access financial services in which traditional federally regulated banks are hesitant to operate.
While medical marijuana is a multi-billion dollar industry, that is legal at the state level in 36 states including Washington D.C., marijuana remains a Schedule 1 drug at the federal level. Therefore, federally insured & regulated banks are, at the very least, cautious about working with marijuana businesses, and more often than not, just refuse to open their doors to businesses operating in the space.
In the absence of banks, marijuana companies are forced to operate with cash and private equity which can cause a plethora of troubling issues ranging from security issues to other unique problems that arise in an all cash business. Without the lending opportunities that banks provide to new companies, this can cause major setbacks for businesses in the marijuana industry trying to get off the ground.
Because the medical marijuana industry is growing lightening speed, many law makers are working to try and improve the relationship between the banking industry and the marijuana industry. For example, the Secure and Fair Enforcement Act, otherwise known as the SAFE Banking Act, is an act that proposes a framework in which banks could safely serve marijuana businesses.
The SAFE Banking Act was proposed by Democratic Congressmen Ed Perlmutter and was passed by the The U.S. House of Representatives in 2019. However, it still has not become law. Were it to pass, the act would make it legal for federally funded banks to do business with licensed players in state-legal marijuana programs.
With traditional banking off the table in most cases, various banking and payment processing solutions are now on the rise and have been a solution to the medical marijuana industry’s banking needs. CanPay was the first created debit payment app for “cannabis retailers.” This app allows people to connect their checking accounts and use debit cards as a solution instead of having to pay in cash for medical marijuana. There is a spending limit of $250 per day and a slight convenience fee.
PayQwick is another payment alternative for medical marijuana and was created by two lawyers. It has similar capabilities to PayPal, which allows people to transfer funds. Some apps are even capable of linking consumers to a bank that will allow them to make medical marijuana transactions. Hypur is an app that does just that and is able to “point people in the right direction” so that they do not have to work with only cash payments.
While this problem is far from solved, the banking industry is slowly working towards help the medical marijuana industry. Some smaller banks have been willing to help businesses in the legal cannabis industry and are looking deeper into what this could mean for them. It goes without saying that with so many states legalizing medical marijuana, there is a greater pressure to help these industries safeguard their money without having to solely work with cash.
If you are interested in the medical marijuana industry in Mississippi, a marijuana lawyer or consultant can help you navigate this nascent industry and avoid the costly pitfalls. At Roberts Wilson, P.A., we recommend a multidisciplinary, team approach to advising future members of Mississippi’s cannabis industry.
For a free initial consultation concerning your interests in the Mississippi Medical Marijuan industry, please contact Medical Marijuana attorney Roberts Wilson by email at [email protected] or calling us on the phone at 662.533.9121.