Author: Andre Bourque, Leafwire Staff Writer

The end of 2022 gave the cannabis financial world a glimpse of what some experts believe will be the inevitable fate of popular alternative payments used by most of today’s U.S. dispensaries. Cashless ATM network shutdowns, beginning in early December, had concerned and affected American dispensary operators scrambling to find alternative ways for customers to pay for products.

Some of the largest alternative payment processors of ATM transactions, such as NCR’s Columbus Data Services, turned off the ability of processors to use their service at the time. Both small, and multi-state operators, were impacted by these shut downs, and it was predicted as much as one-fifth of the industry’s Cashless ATM payment systems were unavailable at one point.

Cannabis shops across the US are rushing to find alternative ways for customers to pay after networks that supported a popular bank workaround began to shut down https://t.co/jJHqnWlaUu

— Bloomberg (@business) December 5, 2022

The Cashless ATM Quandary

Cashless ATMs, also called “point-of-banking” systems, have long been the go-to method for marijuana retailers that don’t have access to traditional banking services to give their customers cash-alternative payment options. These systems allow cannabis buyers to use a bank card, pin pad, and card insertion device in lieu of an ATM terminal.

With Cashless ATM cannabis retail payment solutions, the total dollar amount selected by the customer is directly transferred to the retail dispensary operator for a purchase, while the customer receives the remaining balance in cash, along with their products.

For a customer purchasing $110.50 worth of cannabis goods, for example, a cashless ATM transaction would have the cannabis retailer returning $8.50 in cash. While accounting logic is consistent in both ATM and Cashless ATM payment scenarios, the latter transaction is considered bank fraud and the $8.50 of change paid to the consumer is considered money laundering.

But this technology is made to have ATM withdrawals appear as if they are coming from separate entities, and sometimes different addresses altogether, such as a neighboring Massachusetts McDonald’s, as a Bloomberg article reported in April, 2022. At that time, such transactions looked likely to move about $7 billion past the usual money-laundering controls of the banking system last year — or about a quarter of all U.S. cannabis sales.

“A Cashless ATM doesn’t make much sense, because instead of an automated teller machine that dispenses cash, but what it’s really doing with cashless ATM transactions is hiding their origination,” said Ethan R. Smith, an Executive Assistant with Las Vegas based ATM Merchant Systems. “So, it’s not giving the right address, it’s not giving the right business name, or industry the business is in, which is important, especially for ATM regulations and transactions.”

The Crackdown Will Continue in 2023

This past December’s round-up and shut down of select Cashless ATM service providers came exactly a year after Visa had said it was aware of the scheme, and declared it prohibited on its network. And unfortunately, most cannabis business locations are relying on these non-compliant ATMs to do business, resulting in “outlaw” ATMs.

So, what we saw just last month was merely a foreshadowing of what we can expect in 2023 with greater federal banking enforcement. “This is a pivotal point in cannabis banking,” said the CEO of one payment-technology provider affected by the chain of events.

“It’s left merchants in the lurch because it happened overnight, but the writing has been on the wall for a while now,” said Peter Su, senior vice president at consulting and software firm Green Check Verified.

Cashless ATM Works, It’s Cannabis Cash That Doesn’t

It’s worth clarifying on thing about Cashless ATMs. From a customer standpoint, they’re convenient and effective. Essentially, the Cashless ATM is just a normal payment at the counter, rounded up to the nearest dispensable increment, and given back with change.

For the retailer, the process itself wouldn’t be illegal were the money put into a bank and not the owner’s bank account. A proper solution does exist, and it’s one where a compliant, 3rd party provider owns the end-to-end solution, the funds that finance it, and keeps them distinctly separate from the dispensary’s money.

This is where ATM Merchant Systems has emerged as an industry leader filling the void as an ATM/vault cash services provider completely independent of cannabis business ownership and involvement.

“With ours, we own the ATMs, we’re bank sponsored, we’re regulated by the networks, we follow all the rules and compliance, we load the cash (which is bank funded since it’s loaded completely out of the loop from the dispensary), and none of the dispensary money touches the ATMs,” explained Smith.

“So, it’s clean going in, and clean going out, which is then used to purchase, the customer can purchase it wherever they’re at,” Smith continued. “Our machine just happens to be in the dispensary and they’re able to use their money, understand and purchase the product.”

This is what it takes to be truly compliant with ATM systems in the realm of cannabis dispensaries. Up until recently, it wasn’t necessary, as enforcement hadn’t tightened up on the prevalence of onsite dispensary money fueled workarounds. But look for all that to change in 2023 as authorities firm up regulations and cannabis banking draws nearer and nearer to a federally approved reality.

By Justin Wilmas, Netwatch

There’s no denying the tremendous evolution we’ve seen in the cannabis market over the last few years; all signs point toward this demand continuing to increase. The U.S. cannabis market is projected to reach $72 billion annually by 2030, according to New Frontier Data.

Currently, 21 states and Washington, D.C., have legalized recreational and medicinal marijuana use, and 38 permit medicinal use. As more and more states come online with various levels of production and need, it is more important than ever to explore this market’s security and monitoring requirements. 

Security plays a critical role in the success of facilities in this industry, mainly because of security and compliance. Production and retail facilities rely on video monitoring services to monitor product from seed-to-sale and ensure safety throughout. Video helps stakeholders extract relevant information and events from captured video to save time and enhance responses. Intelligent video solutions take it a step further: prioritizing resource management, enabling various security components to merge into a typical picture, and increasing situational awareness. 

Challenges Abound 

From needing to provide a sitemap detailing security to ensuring various locations are correctly set up for security monitoring – compliance regulations are tedious, evolving quickly, and may vary from state to state, county to county. In cultivation operations, video surveillance cameras are required throughout, assigned to plants and specific areas within the manufacturing facility. It can be challenging for growers and sellers to keep up with the changing laws and regulations. 

Additionally, there is a need to protect a cultivation facility or dispensary from criminal action and liability. Some cannabis businesses may be targets for various types of crime, whether inside the facility or on the premises. With high levels of footfall in and out of dispensaries, it is essential to be protected from claims. 

Cannabis providers rely on robust security infrastructures to address these needs, and more often than not, they include video surveillance and security guards. But COVID-19 changed the landscape as more businesses looked to add intelligent technologies to protect sites that were now unmanned. Concurrently, contract guard companies endured challenging times due to the difficulty of hiring and retaining personnel and the rise in wage rates and health insurance costs.   

Today, companies are looking at finding ways to leverage both services. With technology designed to augment guards, there is an opportunity to embrace a process that will bring both together.  

The introduction of AI supports greater automation and augments the efforts of security personnel on the ground, allowing them to focus on more crucial tasks rather than everyday operations. By combining AI with guards, businesses gain an effective force multiplier that works to ensure the highest levels of security.  

One such solution that can be highly valuable is proactive video monitoring. Proactive video monitoring (PVM) empowers security personnel to focus on high-impact activities while an AI-based engine “watches” for potential security events. By monitoring, engaging in intervention, and reporting, PVM is proven to be highly effective at stopping criminal activity.   

PVM also augments on-site security staff by increasing their ability to see, hear and identify danger. Hazardous activities — such as responding to a dangerous situation — can now be managed by PVM. This approach significantly reduces liability and ensures the continued safety of on-site personnel. It can also help support less desirable jobs, such as working the night shift, where perimeter rounds are completed several times each hour. Using PVM removes the monotonous, sometimes risky work and leaves more strategic duties to your security guards.  

But there is far more to these types of intelligent video solutions.  

PVM detects threats and unauthorized activity and, within seconds, can alert a highly-trained intervention specialist to verify the incident-in-progress. Intervention specialists assess and confirm the danger over a live video feed from a remote location during a security event. When necessary, intervention specialists can proactively intervene by speaking directly to the intruder through a live audio warning advising the individual that they are being recorded and should leave the premises immediately.

These interventions can deter loiterers and other potential criminals from proceeding further onto the premises. In 98 percent of cases, a live warning through an intervention specialist will stop criminals from proceeding. 

Unlike traditional methods of video monitoring which are prone to signaling false alarms, PVM can reduce false alarm frequency by verifying actual actions through intelligent technology and the experience of highly-trained specialists. When necessary, operators will immediately alert the responding police department and management and provide insight into what is occurring to ensure response teams have the correct information at the right time.  

Though on-site monitors and third-party remote monitoring companies can successfully initiate an alarm should an incident occur, PVM companies can assist a cannabis business even further. When contracting with a PVM company, cannabis businesses can customize their alarm response and set pre-determined protocols for the PVM company, depending on the situation and threat level. These protocols may include live auditory interventions, alerting management of the cannabis business, and notifying law enforcement, depending on the incident. 

The Heart of the Solution 

“Proactive” is the driving force behind PVM and what sets it apart from traditional offerings. PVM always has an active presence behind the scenes, observing the situation. Organizations can rest assured they won’t need to pick up the pieces left in the wake of a destructive and potentially costly crime.  

PVM is effective at preventing criminal activity by monitoring, engaging in live intervention, and reporting. An intervention specialist is automatically alerted in real-time of risks caught by the built-in intelligence. If an intruder is detected, the operator can communicate with them directly to tell them to leave. PVM delivers numerous benefits that should be noticed.  

The video surveillance market is full of outdated solutions and reactionary measures that leave businesses with a steep bill to pay. Organizations can achieve guaranteed peace of mind by investing in proactive solutions.    

For those businesses in the cannabis market looking to supplement their security operations, PVM is a solution you should consider. With the experts handling all the heavy lifting, organizations can focus on growth. And, right now, in the cannabis industry, the sky’s the limit in terms of opportunity. 

Netwatch has been preventing crime and protecting assets for cannabis businesses and other organizations with proactive video surveillance solutions for almost two decades. The company’s technology and processes are designed to streamline the flow of live incidents across thousands of sites, enabling faster response with no nuisance alarms. 

Driven by machine learning, the system continually improves, increasing accuracy and quality. This enables faster reaction times and a reduction in false alarms, allowing Netwatch intervention specialists to work to the highest industry standards, including the strictly regulated conditions in the cannabis industry.  

Learn more about our unique approach by visiting our website at netwatchusa.com 

It was a big day for Winter Greens when I spoke to owner Todd Winter, as his Orange County, California delivery-only cannabis store had finally arrived at opening day. This Costa Mesa, California location is the second of two such Winter Greens delivery locations, the first having been established in 2018 in Truckee, California, near Lake Tahoe.

Winter had relocated his family to the area from Orange County and found the need to service both the Tahoe region’s local and tourist population with dependable, compliant cannabis delivery service when he started his first store. But the Winter Greens Orange County location was a bit more challenging to get up and running.

A cannabis-progressive city in an otherwise largely conservative county, Winter Greens’ Costa Mesa location came after over a year of regulatory compliance requirements. Something to be expected from a city new to the recreational cannabis market and still discovering what regulations work, and which are merely bureaucratic.

A practicing attorney by trade, Winter was able to navigate the challenges. With a portfolio of notable clients including Eureka Vapor, Pacific Stone, Humboldt’s Finest, and Kush Bottles, WINTER LLP has helped small and medium hemp and cannabis businesses navigate the ins-and-outs of regulatory nuances.

Despite the unpredictable hurdles he would encounter opening his Orange County operation, one thing Winter had in place the whole time was his payment solution.

The Problem

It’s customary for cannabis operators to encounter struggles managing a primarily cash transaction business in a world of traditional banking. With cannabis still federally illegal, business owners face severe limitations on how to manage their banking and payment needs. Cannabis operators frequently try to apply traditional solutions to an untraditional business, and for Winter, the experience was no different.

Winter Greens first attempted to manage transactions and banking with a traditional bank account. That works for so long, until the bank finally, and ultimately figures out you’re not selling Beanie Babies or whatever other business you’ve claimed to be conducting. This leads to a nightmare scenario where a cannabis operator’s funds are either held indefinitely or never released.

It never came to that for Winter Greens, but the interim solution was short lived. The company next tried to conduct its banking business through a credit bureau, but that proved to be a temporary solution as well. Limitations on cash withdrawals, deposits, and the availability of funds make credit bureaus a patchwork of difficulty to work with. As a last resort, Winter Greens used Square as a transaction solution, but that, too, proved short lived.

The Dama Solution

Ultimately, Winter discovered Dama Financial and its suite of financial solutions tailored for cannabis operators. With an account managed by Dama there are no limits on deposit frequency or amounts, and no frustrating end-of-month caps on account size. Dama follows all FinCEN and BSA/AML rules, adheres to Cole Memo priorities, and stays current with state and federal regulations to ensure clients remain fully compliant, something important to Winter. 

Paytender

Once Winter Greens was up and running with Premier Banking, Winter integrated Paytender into the company’s point of sale system. Text-to-pay electronic payments now account for nearly 40 percent of overall sales at his Truckee location.

“We love Paytender, we try to get everyone on it,” he said. “Once you’re set up, it’s really incredible, and so easy to use. Everyone who uses it loves it. Our drivers love it too. The tip feature is great.”

Once users have signed up on paytender solution, and have successfully linked their bank account, the system generates a “QR code” which, sent to a user’s phone, enables the payment will be continued on a mobile device. Next, the user receives a text from Winter Greens with a link to paytender to complete the transaction to pay for their delivery before it arrives.

With Dama’s proven, reliable banking and transaction solutions in place, Winter Greens Orange County is poised for success. The company has even created a rewards program for its customers converting 3% of every order placed into “Winter Greens Rewards” to be redeemed at checkout.

2022 has been a tough year for cannabis companies seeking equity investment. Global equity raises have declined 77% year-to-date, to $962.1 million. I’ve seen even promising, patent-holding cannabis companies struggling to find the right investment partners.

This is likely not going to change until corporate valuations improve, according to some industry execs.

“Cannabis is a defensive industry,” Andrew Fellus, CEO of Canna Business Resources (CBR) told me in an interview. “Investors in general view this industry as defensive because it’s not going anywhere. Even if it does slow down a bit, it’s not going to zero.”

Fellus remarked that industries like electric vehicles have a lot more investment risk than cannabis. His point is well taken, as California based electric vehicle manufacturer Rivian lost $1.7 billion in the second quarter of 2022.

Equity investors know the cannabis industry will always be an investment option, are holding out for a stronger market, and are meanwhile looking for some meaningful short-term fundamental results elsewhere.

Still, cannabis operators need to expand in light of the fact that there is less capital available in the market. Many are left to find consolidation parters that can provide some liquidity or better access to capital. For operators like these, accepting multistate operator stocks at current discounted levels presents a potential upside in a merger or acquisition deal.

Viridian Capital Advisors tracked 75 mergers and acquisitions transactions globally with a total value of $3.5 billion through the end of April 2022, up 3.5% from the same year-to-date period in 2021.

Cannabis Debt Financing on the Rise

By contrast to equity investment, cannabis debt financing is up 73% year-to-date in the U.S., to $729.3 million. This bodes well for the team at CBR that specializes in cannabis debt financing.

CBR provides cannabis companies with growth capital, acquisition financing, equipment financing, CRE financing, or special situation financing. The company can provide funding up to $20M as a bridge to an equity deal or a just general working capital facility, both first and second lien loans, and is often able to structure financing that is complementary to an existing credit facility.

The company is a market leader in providing 2nd lien loans to cannabis operators with additional capital needs beyond what their existing senior lender is willing to provide. A unique product is tailored to companies that have an existing senior lender, can demonstrate sufficient cash flows, and are looking for a creative capital solution.

“We’re not equity players, we don’t invest in the equity, we don’t own the equity, we provide financing options for working capital for businesses that either need to grow or that are just getting off the ground,” Mr. Fellus explained. “And instead of taking eight months in investor discussions and going out of business in the meantime, we can close a financing in as little as one week.”

Financing New York Cannabis Operations

CBR prominently represented itself as a capital source and viable alternative to equity investment at the recent Benzinga Cannabis Capital Conference in Chicago, IL. With timely progress in New York’s Adult Use licensing activity, CBR presented cannabis operators with a faster, non-dilutive financing option to quickly tap into the state’s market opportunity.

CBR knows that cannabis entrepreneurs and existing companies in the licensing process must line up their working capital today to prepare for a surge of demand next spring. The New York market is bound to be supply constrained and that means manufacturers can be a bottleneck, or they can be a resource. Having the right amount of working capital to launch a thriving and critical part of the supply chain.

For soon-to-be New York dispensary owners, shelves need to be fully stocked with enough supply in inventory to make it through an expected surge in demand upon opening. And for cultivators, massive amounts of working capital will be needed to bring much needed high-quality flower to the regulated New York market on a timely basis.

Mr. Fellus, himself a lifelong New Yorker, said that the New York market will require billions in investment in infrastructure, marketing, product development and compliance, and that CBR has set up a separate division and allocation to underwrite and finance New York market participants.

CBR has a track record of success assisting new and growing cannabis businesses with capital resources to seize opportunities brought about by regulation and legal change. When final regulations were approved for consumption lounges in Nevada, CBR was able to help a client acquire a suitable property with which the operator could vertically integrate its existing cultivation operation into a retail store with attached lounge.

The company provided $3.5 million in loans, consisting of a $2.5 million in real estate acquisition and $1.0 million for working capital needs. The working capital needed for the facility included tenant improvements, furniture and fixtures, personnel, and inventory. The loan was structured at a 75% Loan-to-Value ratio with a three year-term and interest only component.  The cannabis real estate loan has a three year balloon.

In some cases, CBR even offers exclusive interest only structures.

Understanding Hurdle Rates

A the halfway point of the year, interest rates began to rise, impacting the cost of capital for borrowers. At the same time, it’s also impacted hurdle rates for investors. As Mr. Fellus explained it, “The Hurdle rate being the hurdle you need to overcome in order to be a profitable investor.” So, the hurdle rate being your total cost of capital.

“So the way you would look at it if you’re an investor is, ‘Okay, I’m borrowing money from somewhere, whether it’s investors or otherwise,” Fellus said. “The cost of that capital is ‘X’ plus your cost of overhead investment committee compliance, all of which are going up. So, it’s not getting easier to run one of these lenders or investor groups because the regulatory burden is increasing and so that means your hurdle rate is going up.”

If your hurdle rate going up, then the cost of capital to the borrow is also going up. As an investor, to be
profitable on your investment costs you more. “I think a lot of people don’t know that cannabis is still a nascent industry when it comes to talking about really openly talking about the inner workings of finance,” Fellus continued.

The Future of Cannabis Debt Financing

Many, many successful entrepreneurs are in this industry and they’ve done well for themselves and they
haven’t needed outside financing. But when they do, as Mr. Fellus pointed out, they begin to see how the hurdle rates work for private capital and it’s more expensive than they anticipated.

“As the cannabis industry becomes more competitive, it’ll become prohibitive to bootstrap it and you’ll need outside capital,” Fellus said, “So I think it’ll become more prevalent to the discussion of cost of capital in the industry in the next couple years.”

As a family office with its own money, CBR “We don’t need to get our capital from anywhere else, and we have set rates for borrowers that we’ve been doing for years that are not economically sensitive,” Fellus explained, citing his company’s advantage for its borrower clients. “I call them clients because they really are–like half the time I spend my time helping them learn how to run their business.”

In today’s capital sparse cannabis industry, having a lending partner that will not only provide the resources to operate and grow, but guide your business along the way is an ideal scenario. And for small and medium sized cannabis operators not looking to participate in an M&A, CBR offers an appealing alternative and an opportunity to have a financing partner that will evolve as their business does.

I ran into cannabis payments expert Ian Rassman recently at a Sunday night Cannabis & Movies Club viewing of “Nacho Libre” in downtown Los Angeles. There, he was manning a table for the local chapter of the National Organization for the Reform of Marijuana Laws (NORML), an organization that works diligently to build community through cannabis advocacy and their compassionate medical donation program. 

“Do you have everything you need from me for that Paybotic article?,” he inquired, having sent me some follow-up answers to an interview I’d conducted with him on the topic weeks earlier. “I’m all set,” I replied.

There’s something to be said for his enthusiasm. After all, payment processing isn’t a necessarily a sexy or riveting topic. Adding “cannabis” to the mix only makes it mildly more exciting. To be passionate about payment processing in what’s considered an alternative and risky market, requires understanding just how fundamentally important it is to the backbone of the industry.

The cannabis industry brings with it, a set of stringent guidelines and regulations, policies and procedures, requiring vendors to seek out alternative avenues to the traditional point of sale (POS) systems available. 

Banking and payments for cannabis is a frustrating process in the cannabis industry. Nearly every business owner has horror stories about having their banking or merchant services accounts shut down, funds seized, or a myriad of other financial nightmares. 

As an authority on niche industry payment offerings, Rassman has built a national network of partnerships with banks and credit unions that are willing to offer full-service cannabis banking solutions to state licensed cannabis related businesses, and is able to offer merchants practical solutions.

Industry Beginnings

Rassman honed his payment expertise in the limo industry, and rapidly expanded his client base out to other traditional retail merchants and verticals such as restaurants, attorneys, automotive, and plastic surgeons to name a few traditional businesses that frequently receive payment via credit cards.

In 2017, sensing the wave of impending legalization of recreational cannabis in California, he decided to go deep into the cannabis vertical.

“Not realizing how truly different the cannabis industry is when it comes to financial services, I was in for a quick and rude awakening,” Rassman told me. “The traditional credit card processing that I was familiar with was forbidden in the cannabis industry and compliant alternatives were required.”

It’s been over a decade now that he’s been in the business, and Rassman offers traditional merchant services outside of the cannabis industry, along with a specialized suite of compliant cannabis payment solutions for Cannabis Related Businesses (CRBs).

Atop his portfolio of vendors of choice, Rassman cites Paybotic as his recommended go-to cannabis payment and banking solution provider.

Paybotic Solutions

Paybotic’s custom payment solutions include debit card processing and PIN-authorized credit card acceptance, ACH processing, check service, gift card programs, merchant cash advances, cannabis banking, and more.

Paybotic helps clients with accountancy services, cash management, including online tools like bill payment and account analysis, as well as business insurance providing top-tier coverage for any risk situation.

Rassman attributes his long-standing cannabis industry involvement and activism as part of the reason he serves as one of Paybotic’s leading cannabis industry representatives, and cites the company’s reputation for remarkable customer service as one of the reasons he’s so passionate about the provider.

This Trustpilot review and an average 4.7 stars illustrates his point.

Q&A with Ian Rassman

I dove into a Q&A with Rassman on the topic of cannabis payments, industry struggles, and how activism plays a role in his success.

Q: What can you tell me about the origins of your interest in cannabis?

Rassman: I grew up on the Big Island of Hawaii during the late 1970s and 80s and I was definitely aware that cannabis was around me with some regularity. We called it Pakalolo which is the Hawaiian slang word for cannabis. By the time I was in high school I knew many people who were using it, but in all my years of living in Hawaii, I never tried it. 

Looking back, like most of America, I was most certainly influenced by much of the media on TV during the failed War on Drugs; “This is your brain on drugs,” “Gateway drug,” that sort of thing.

In the mid 90’s I was fortunate enough to get a job in Europe as an international traveling software engineer. After a year of being based out of London, my boss offered that I could live anywhere I wanted as long as I had quick access to a large International airport. So, within weeks I packed up a right-hand drive U-Haul and moved to Naarden Vesting, just 20 minutes outside of Amsterdam. 

One of my software partners there was a retired police officer from the famous Red-Light District in Amsterdam. I learned a lot from him about Holland’s long-standing, sensible, and non-criminal approach to cannabis. From my local Dutch friends, I came to understand more of the cultural and medical aspects surrounding cannabis during the several years that I lived there. 

By the time I returned to California in 1999, Proposition 215 had been enacted and California’s approach to cannabis was picking up speed. The culture was coming out of the closet and becoming more mainstream in California. I had just moved to Marina Del Rey and was within a 10-minute rollerblade of Venice Beach where dispensaries and script-writing doctors seemed to outnumber Starbucks.

Q: Can you give us a quick breakdown on the difference between ACH transactions and the cashless terminals Paybotic uses?

Rassman: ACH payments are electronic payments that go through the Automated Clearing House (ACH) network. Funds move from one bank account to another with the help of a centralized system that directs funds to their final destination. 

Most people are already familiar with ACH payments either from direct deposit from their employer or when they pay bills electronically from their checking account, where the customer would need to know their bank routing and account numbers to transmit funds. 

Paybotics brings you a cashless ATM (point of banking) terminal supports PIN-based card transactions: ATM/debit cards. When the customer inserts their debit card, a digital transfer is initiated. This gives your customers the ability to pay with their cards at the point of sale, increasing customer throughput and average ticket price. 

The secure countertop and 4G mobile terminals that we use are easily updated with the latest software, and on the first day that the card brands allow for it, we will patch the terminals to accept those cards. Customers must have their card present and know their ATM PIN number to transmit funds.

Q: What are the benefits cannabis retailers can experience by using Paybotic digital payments? Do customers spend more? 

Rassman: Retailers typically experience increased average ticket price as compared to cash payments. 

Other benefits include:

• Eliminating the liability of having cash at the counter.
• Safe, Secure and Compliant.
• No processing fees to your business.
• Quick and easy approval process with only a cannabis license, a driver’s license, and a voided check. 

Q: Cannabis delivery services are subject to robberies and other hazards on the field. How can digital payments make deliveries safer?

Ian: The new normal brings health and safety concerns to both customers and drivers alike. First and foremost, on everyone’s minds these days is the current COVID-19 pandemic. No one wants to touch cash anymore, so digital payments via a Cashless ATM with limited contact is a much safer alternative for everyone. Eliminating the cash also makes drivers less of a target for robberies.

Mobile terminals providing digital payments, can enable safe home delivery and curbside pickup. 

Cannabis payment processors have always been a shaky part of the cannabis industry. There are horror stories of accounts getting shut down and assets being frozen. If your bank throws you out for being a cannabis business, your merchant services account dies along with it.

However, there was a time when some CRBs and processors, to get around restrictions put in place by the card brands (Visa/MC/Amex, etc.), would mis-represent who the merchant was by coding the dispensary as a “pharmacy” or a “florist.” Eventually it would become clear that there were no aspirins or roses being sold and that account would be shut down. 

Misrepresentation was a common contractual reason for closing a merchant services account. It should have been the responsibility of the processor to lead their customer down the road to compliant solutions, rather than the many work-arounds (crypto, blockchain, stored value, etc.) that exist to undermine the card brand policy of not accepting credit cards for cannabis. 

No matter how much everyone wants it, there are simply no air-miles for your cannabis purchases. Transparency is critical in this process. For our cannabis clients that work with Paybotic, we only utilize Point of Banking (POB) where all transactions are PIN-based and through your ATM card. 

Paybotic’s solution utilizes the ATM rails. In the simplest possible terms, a payment rail is any form of digital infrastructure that transfers money from one individual or business to another. These are a completely different set of payment rails than the ones owned and operated by the card brands. At this time, there is no Visa/MC/Amex for cannabis. 

Q: What are three concerns that you have as the industry continues to grow?

Rassman: I am concerned that we are not doing enough about expunging criminal records for non-violent cannabis convictions. We can’t leave a single person in prison for selling cannabis while our regional governments are handing out licenses to sell cannabis. I am concerned that we need to do more on social equity, especially here in Los Angeles. 

As well, we need expanded licensing for those social equity applicants and faster timelines on that approval process. I am concerned that the Federal Government has not taken more decisive action on legalization when 70% of Americans believe cannabis should be legalized, and less than 30% oppose legalization. 

The last decade has seen a steady increase in support for legalization and the disparity between these numbers continues to widen. The path towards Federal legalization and de-scheduling (not rescheduling) is critical for enabling additional banks and credit unions to determine their own risk assessment and willingness to bank CRBs, without the threat of being afoul of Federal Know Your Customer (KYC) and Anti-Money Laundering (AML) issues.

Q: What motivates you to volunteer your time with NORML and what else do you do in the industry?

Rassman: My entrepreneurial instincts made me realize that I needed to spend more time and energy to help change the things that I thought needed addressing within the industry. I also felt it was important to volunteer my time and pay it forward to support the business community from which I expected to make a living. With its national effort to reform some of the banking issues we were all facing in the industry, NORML became that vehicle for me. I found that NORML’s mission aligned very well with my core values. 

I learned everything I could about consumer activism, safe access, social equity, expungement policy, employment protections, and education. I ramped up my time and effort within the organization and realized that Los Angeles, where I have lived for over 36 years, is a perfect microcosm of the industry as we are undoubtedly the largest cannabis-friendly city on the planet and well-positioned to set a positive example. 

With a mature medical marijuana market, a plethora of cannabis companies basing themselves in Southern California, a liberal government policy on cannabis and a county population larger than 41 U.S. states, Los Angeles is where consumers, industry, and policymakers come together to define how cannabis will become integrated into our communities.

I also run a very popular Event Calendar for the cannabis industry. I believe in building community. The cannabis industry is very old school in terms of relationship building; the people that you do business with are usually the people you have met face to face. 

I created the cannabis event calendar to provide a quick view of what is coming up in your area where you can meet so many of the amazingly talented people working in the cannabis industry. The calendar has promotional codes for reduced ticket prices and full event details that you can click to add to your own personal calendar on your phone so you know where you are going. 

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For more information on cannabis payments and banking services, Ian Rassman can be contacted at Rassman.com