The cannabis industry is certainly a lucrative one, as seen in states like Arizona. Whether businesses are selling accessories like bongs or own a brick-and-mortar dispensary, there is an endless clientele of cannabis consumers. That being said, plenty of dispensaries have been shut down due to improper conduct, whether it’s selling unregulated products or the use of shady business practices. It’s necessary to earn the trust of your community, as well as lawmakers, local officials, and banks, who have a massive impact on the longevity of your business. Here are a few tips to make sure your cannabis company stays in the safe zone.
Even as cannabis sales increase, dispensaries and other types of cannabis-related businesses could face troubles when it comes to finding a vendor. Some of them attempt to use credit cards as a form of payment, even though it’s forbidden by federal law. While it’s a tricky line to walk, and many cannabis companies find ways to allow credit card use, it’s a risk. Some banks will allow it, many others will not. So, if a potential business partner is offering workaround solutions in order to accept credit cards, do your research. You don’t want to end up getting caught like the Eaze Technology employees who were sentenced to prison time for trying to process $100M in cannabis-related credit card payments.
Anyone in the cannabis industry should also find themselves trusted merchants for their in-store transactions. Merchant agreements can be filled with the aforementioned workaround solutions for credit card payments but also, they’re prone to holding a certain percentage of your earnings for periods of time. They claim it’s for safety measures in order to have a pool of money for payments. However, an unexpected expense is all it takes to make the waiting time a burden on your business. Additionally, in the case a merchant’s shady business practices catch up to them, your business will take the fall for lost profits.
Most importantly, make sure you’re keeping your business as transparent as possible. It’s difficult enough for dispensaries to handle their money through financial institutes. Banks should be informed if you’re opening a bank account specifically for a cannabis-related business. If not, they’re bound to shut down operations the second they find out. It could be through sketchy cheques or one too many cash deposits. Unfortunately, there’s no way around this issue if you do get caught. Opening a new account can simply lead to getting shut down, again, until they enforce a full ban. That’s not only a blow to your business but to your personal financial situation.
The best advice anyone in the cannabis industry can receive — keep your business legal and clean to avoid any headaches.