Sure, let’s have all the businesses that are already flush with marijuana do all their business in cash. How could that go wrong?
Credit card transactions are vital to a business today. If consumers aren’t using a traditional credit card, they often use a debit card in place of a check, a transaction that is also dependant on businesses to be able to process credit cards. The Medical Marijuana Business Daily, a trade website that covers all things marijuana business, is reporting that the main national company that handles credit card processing services, Electronic Merchant Systems, will no longer accept Visa and MasterCard transactions from dispensaries. This change is effective on July 1st.
Electronic Merchant Systems, is the largest contractor in the nation for processing credit cards. We have learned they sent out an email to the merchants who have a medical marijuana business telling them they have changed their policy and will no longer process any Visa or Mastercard payments for them. They did tell their clients that they can still keep or lease their equipment, since they will still take Discover cards, but asked that medical marijuana merchants batch and settle any Visa and Mastercard transactions by June 30.
We have been reporting for years on the difficulty for medical marijuana businesses to do traditional banking. This latest development will be a big blow to the companies that would rather not have piles of cash to do business. American Express had cut off the industry last year. With Visa and Mastercard out of the picture, most of the industry will be forced to operate on an all-cash business model.
There are some dispensaries that have worked out banking and credit card processing through smaller local banks, and many have offered vague, or even misleading descriptions of their businesses to currently accept cards. The medical marijuana dispensaries are trying to scramble to get work around plans such as on-site ATMs.
Michael Rupkalvis who works with medical marijuana companies to help them find payment processing services tells those in the industry to be careful signing up for a new merchant account that claims they will still process your credit card payments. He says that you should make sure that “medical marijuana dispensary” is listed as the business type on the application and that they have marijuana listed as the product, since less reputable merchant credit card services may try to misidentify the type of business to obtain the account.
Working with cash only is troublesome for dispensaries that have to take into account their own security, and now that of their patients who will be coming in the door with a pocket full of cash. We will be taking a more in-depth look into business stories like this one with the addition of a business expert here on The Russ Belville Show, more on that addition and hopefully a few more coming up in the next few weeks, right here on National Cannabis Radio.
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