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