This conversation between Centri Business Consulting, NCS Analytics, Hypur, Inc., Michigan Bankers Association and Union Bank comes from Benzinga’s Virtual Cannabis Capital Conference that took place on August 18. Click here for more coverage of this event with presentations from some of the top CEOs, investors and lenders in the cannabis space.
Navigating banking and financing in the cannabis industry has been a long-time challenge. There are risks associated with banking in the cannabis space which has contributed to the current setbacks in regards to payment processing.
Managing Partner of Centri Business Consulting Michael M. Aiello moderated a panel of financial experts in the cannabis space where they discussed topics such as legal payment processing and fraud.
Centri Business Consulting is an expert financial advisory firm that provides accounting advisory services to the cannabis industry.
Payment Processing Concerns
Aiello asked the Chief Revenue Officer of Hypur, Inc. Tyler Beuerlein what his perspective was on payment processing in the cannabis space and doing it the legal and right way.
“We’ve seen every iteration of a payment product come out over the last six-and-a-half years. We jokingly refer to it as whack-a-mole in this building,” said Beuerlein.
Beuerlein went on to discuss the desire of many merchants for congress to pass the SAFE Act which would allow them to start running credit cards.
“What they don’t realize is that the branded card networks are not coming into the cannabis industry until federal legality, period,” he said. “The SAFE Act does not change that.”
If it involves a branded card somebody has misrepresented the nature of the business on the application and that’s fraud, unequivocally, he continued.
One of Beuerlein’s biggest concerns is the use of reverse ATMs and cashless ATM models that have been implemented by many in the industry. “People don’t yet realize that those are not permissible and fraudulent.”
He then went on to caution those in the industry to get in touch with people that understand the payments landscape and the banking landscape in this space before making a decision with payments.
As concerns around money laundering, questionable workarounds and fraud were brought into the conversation, Aeillo extended the question of how payment processing can be done without these questionable actions.
“As it stands today, the only truly permissible means of transaction is a direct bank-to-bank transfer model,” said Beuerlein. “To do that, the banker credit union that originates those transactions needs to have built out the regulatory compliance capabilities to bank the industry in general.
Beuerlein emphasizes that a third party can not be involved…