Piles of cash.
Its often one of the biggest challenges for a marijuana company.
By law, customers cant use credit cards to buy marijuana, and banks wont open accounts for cannabusinesses because they are federally illegal. For the most part, customers pay with cash, stores compensate employees and pay suppliers with stacks of cash, and farmers pay for their utilities and lawyers with bundles of cash.
Entrepreneurs Keith Marks and Kenneth Berke, both California attorneys, have come up with a financial technology solution – a closed loop payment system that allows businesses to pay bills and collect payments electronically. Its like the PayPal of Pot. Store owners, processors, and growers can take money out of their bank accounts and put it in the PayQwick system which will send invoices, transfer money electronically and write checks for payments. Then they can transfer money out of PayQwick and back into their bank accounts.
PayQwick can offer this service by taking on the legal financial compliance role. The company is vetting the finances of legal marijuana businesses, visiting quarterly to make sure the marijuana companies are complying with state regulations, and following the funds from seed to sale as required by law. The company performs Bank Secrecy Act and anti-money laundering compliance, know-your-customer and transaction due diligence, and files currency transaction and suspicious activity reports.
Once the compliance regulations are met, marijuana money is considered bankable according to Berke. Were a cash management solution.
The founders have worked with marijuana and banking regulators in Washington, Oregon and Colorado to register federally as a money service business, and obtain a state-issued money transmitter license in each state where one is required. As marijuana is legalized in more states, the company plans to enter any market where seed to sale traceability is available.
Some credit unions and community banks do offer accounts for marijuana businesses, but many are exploring the process slowly, and taking on just a few customers. Most still dont want it known that they are serving the industry.
At the end of 2015, the two community banks working with PayQwick in Washington State underwent their FDIC safety and soundness exams. In the end, both were allowed to keep operating with the PayQwick system. If the FDIC had found a problem, we wouldnt be in business right now, said Berke.
The company says it currently has 169 active businesses on its system, 55 more in the pipeline, and has issued 1200 consumer cards that customers can use for cashless payment. Ten employees manage the software, working to integrate PayQwick with Quickbooks, seed to sale software, and other business systems the industry is using.
All stakeholders want a more secure, transparent payment system with less cash floating around, said Berke. The government prefers electronic payments because they are easier to monitor, according to Berke, and cannabusinesses are looking for greater security. Its just not safe for employees to be carrying around large amounts of cash as they drive around the state paying vendors or delivering goods.
News Moderator: Katelyn Baker
Full Article: PayQwick Aims To Be The PayPal Of Pot
Author: Julie Weed
Contact: Forbes
Photo Credit: Quickpay
Website: Forbes
