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Cannabis Cash Creates Threat For Cannabis Business Owners

The cannabis industry is growing year-over-year as individual states legalize the plant. The industry is growing because of legalization, but also because of market demand. People are spending their hard earned cash on cannabis every day, which therein lies the problem. Cannabis cash is not accepted by most financial institutions and leaves cannabis business owners with few options on how to deal with the surplus of cash. When we reference cannabis cash, we are speaking directly to the actual printed currency used in transactions. Because financial institutions are beholden to federal law, most financial institutions frown upon participating in any transaction that involves the exchange or use of cannabis cash.

s2s insurance, eric rahn, marijuana insurance, dispensary insurance, lab testing insurance, cannabis cashAs long as the federal government views cannabis as a Schedule I drug along the lines of heroin and cocaine, financial institutions are at risk of being audited, fined, and possibly shut down for violating federal law if they partake in any transactions using cannabis cash. At S2S Insurance we see the accumulation of large amounts of cash problematic for a number of different reasons. “Cash Only” businesses invite criminal activity because criminals have an opportunity to obtain a large amount of cash that cannot be traced and can be used quickly to avoid capture. Cannabis business owners become targets for breaking and entering, robbery, and vandalism. An attempted robbery whether successful or not can leave a great deal of property damage, from broken windows or doors, to broken equipment, display cases, vaults or point of sale devises. That type of damage is costly to any business owner, not just those in the cannabis industry.

The marijuana business is booming in the US. According to a report from the investment bank Cowen, legal marijuana is set to hit $75 billion in sales by 2030, putting it on par with soda consumption. Marijuana cultivators are now listed on the NASDAQ, have former politicians on their board, and are backed by heavyweight investors like Leon Cooperman.

But for many big institutions, the risks of banking and lending to the cannabis industry under the current federal mandate just aren’t worth it, especially with all the extra paperwork and scrutiny it can generate.

“For cannabis businesses, this means that access to the basic financial products like checking and savings accounts can be elusive,” John Hudak, a senior fellow at the Brookings Institution who studies issues pertaining to marijuana legalization, told Business Insider.

s2s insurance, eric rahn, marijuana insurance specialists, liability insurance for marijuana, dispensary insurance, cannabis cashTyler Beuerlein, a VP at Hypur, an Arizona-based fintech startup that acts as a middleman between banks and cannabis companies, told Business Insider that he believes there are “less than 30” banks willing to do business with the booming cannabis industry in the US.

That means the costs of doing business and remaining compliant with the byzantine patchwork of state and federal laws guiding the cannabis sector are much higher than in any other industry.

Every cannabis business owner that has the “cannabis cash” problem, should take the first step in protecting their business by getting cannabis insurance. Standard insurance polices will not be enough because of the uniqueness of the cannabis industry. Cannabis business owners should be working with experienced cannabis insurance specialists like Eric Rahn of S2S Insurance, to help determine the right risk management strategies for their business.

read more at businessinsider.com

How Cannabis Businesses Deal With Cash Concerns

A cannabis business owner has many concerns when starting a business, such as hiring employees, quality of products, and marketing to name a few.  The one aspect that must be considered early on is how cannabis businesses deal with cash.  Not just making money but how will customers pay for the product, where will money be stored, how will it be transported, what bank will the business use? These are questions that traditional businesses have to answer as well, but typically for those businesses it’s as simple as filling at a form at the local bank or credit union. For a cannabis related entity processing transactions and money is far from straight forward. Most banks and credit unions which are regulated by federal agencies refuse to accept money from cannabis related businesses. The banking industry’s refusal to do business with the cannabis industry requires cannabis business owners to work in a world of cash only transactions. Cannabis and cash are for the foreseeable future tied together at the hip forcing many to ask the question how do cannabis businesses deal with cash.

marijuana insurance, marijuana business, medical marijuana, liability insurance for marijuanaFor many cannabis businesses being forced to work only with cash, there are logistical problems and extreme safety concerns.  The logistics begin with basic payment methods.  Business owners can only accept cash, meaning debit and credit cards can’t be used, customers can’t use checks, therefore the only form of payment accepted in most cannabis businesses is cash. A business may be able to get away with claiming to be a “retail sales” company as a designation on a bank form, but eventually banks and credit unions will question the large number and amounts of cash transactions and may close the account. Cannabis business owners are faced with the reality of housing substantial sums of cash onsite, or having to transport tens of thousands to hundreds of thousands of dollars each day. Many business owners are forced to purchase large vaults and safes to store cash onsite, and pay for armored vehicle services to move large sums of cash to other facilities for storage. Being forced to manage these large sums of cash constantly creates additional expenses, but also creates additional risk.

Without a banking account, some cannabis businesses have to fund everything from payroll to taxes in cash. Those companies also cannot accept debit or credit card payments, apply for mortgages or even get small-business loans — all matters that are regulated by the federal government.

It also leaves the businesses with stacks of cash piling up in their offices — and criminals have taken notice.

Last spring, police in Phoenix estimated that six area medical marijuana dispensaries were robbed in a two-month span, according to local media reports. The year before, June was a particularly brutal month with several robberies or attempted robberies in Denver, Los Angeles, Detroit and San Diego.

The violence culminated with the death of an Aurora, Colorado, dispensary security guard, who was shot during a robbery on June 18, 2016. In Riverside, California, the next week, two dispensary workers were wounded in separate holdups less than 48 hours apart.

Cannabis Businesses deal with cash only operations

Cannabis businesses dealing in cash is not a secret. Criminals are aware that these different cannabis businesses deal in cash and very large amounts of cash on a regular basis.  There are countless examples of robberies and robbery attempts on cannabis businesses for this very reason. The reality is, if you are starting a cannabis business, you will have to deal with large amounts of cash and the risks associated with having large amounts of cash on hand. While each state has it’s own rules regarding marijuana and it’s legality and how businesses can operate in that state, cannabis is currently illegal on the federal level. As long as cannabis remains illegal on the federal level, the connection between legal marijuana and cash will remain closely affiliated. Business owners will have to protect their businesses from the various risks such as vandalism and theft by working with S2S Insurance Specialists for not only your property insurance needs, but all your cannabis insurance needs.

read more at washingtontimes.com