June 29, 2012

Big Changes for MMJ Industry Sunday as Colorado Lifts Ban, Credit Card Firms Shut Out Dispensaries

Tags: banking issues in mmj, colorado medical marijuana moratorium, july 1, mastercard, visa

Medical pot updates, cannabis dispensary news and marijuana developments

Forget Independence Day. The real fireworks this year will materialize on July 1, when two developments will alter the medical marijuana landscape:

#1. Colorado will lift its two-year moratorium on new dispensaries, opening up the market to new players.

#2. Most dispensaries across the nation will no longer accept Visa and MasterCard transactions, as we first reported earlier this month.

The first one is an important development for several reasons. Colorado is now regarded in many circles as the epicenter of the medical marijuana industry, gaining more prominence and influence as California struggles with a crackdown and significant industry consolidation. So it’s pretty significant that the leading MMJ is allowing new dispensaries to open up shop, which will create opportunities for people looking to get into the industry and could help expand the market as a whole.

It also, however, will bring a new level of competitiveness to MMJ in Colorado. That could benefit patients in the end but will make it harder for the weaker businesses to survive. Current dispensaries will have to be at the top of their game and adapt to the fact that they no longer enjoy a relatively closed market. This should make the industry in Colorado stronger as a whole, but it will surely create some pain along the way.

The second development is sending a panic through the industry. With American Express already out of the picture, the loss of Visa and MasterCard as payment options means most dispensaries will have to deal only in cash. That is especially problematic from an operations standpoint, as it makes tracking and safely securing a logistical nightmare. It also puts dispensaries at greater risk for break-ins, robberies and crime in general. The lack of available banking solutions is one of the biggest issues facing the industry today and severely limits its growth. This development will no doubt exacerbate that problem and increase the urgency behind efforts to finding legitimate banking and transaction processing options.

9 Comments:

dabutante

June 29th, 2012 at 6:41 pm

Now would be the time for Discover to step up to the plate. Who uses it now? No one. Who would apply for one immediately if it were the sole cannabusiness credit card? Everyone.
vaporgirl

June 29th, 2012 at 6:59 pm

Isn’t the problems with credit cards is that many are from states other than the ones the dispensaries are in and, therefore, that is interstate commerce.Can people get local credit cards from their local banks that would solve this problem? Just a thought.
jonihelmer

June 29th, 2012 at 8:27 pm

good point about Discover.Lets all write them.What about a unified mmj dispense debit card?
Michael Rupkalvis

June 30th, 2012 at 9:52 pm

Unfortunately very few people carry or use Discover cards. Probably not enough to justify the high monthly & semi annual fees it cost to keep a merchant account open.

There are still legitimate ways for a dispensary to accept Visa/MasterCard credit and debit cards.
dabutante

July 2nd, 2012 at 4:51 am

that was my point. discover is a failing brand and this is a legitimate opportunity for them to swim instead of sink.

do I really think they’re smart enough or “liberal” enough or socially conscious enough to actually do that? of course not.

where there’s a will, there’s a way. or at least an attorney looking to redline it.
KC

July 3rd, 2012 at 3:40 am

It truly is a historic moment.

Colorado has given the nation a very powerful patient & small business-friendly retail sales model. The 1st ever in our nation’s history.

In the last few years, I started and sold several MMJ businesses, toured hundreds of centers, met with thousands of patients, and hope that Colorado’s model is accepted in the future as the standard.

Banking Issues

1. banks are FDIC issured – any money placed in a bank that is related to an illegal industry is considered money laundering.

2. credit/debit card transactions cross State lines electronically – this would make any transaction a cross State matter. Illegal again.

Colorado, this day may go down in history as a turning point on America’s slow march towards a rational and business friendly medical marijuana policy.

New patient application are up for 5 months in a row. Local investors are working on cancer and cannabis products, new businesses are flourishing along with the MMJ industry and sale tax revenues are reaching all-time highs. Pun intended.

Colorado stand tall – America is watching.

KC | start@mmjbusinessacademy.com
Annie

July 6th, 2012 at 5:30 pm

How does one apply for a MM card? I am pretty new at this but have been diagnosed with a hip/leg issue that benefits greatly from the use of Cannabis and yoga. I hadn’t smoked it since the early 80s due to my profession and kids. Lovin’ this page, and planning a trip to Denver in August… Namaste’ Annie
Lisbeth

July 6th, 2012 at 10:38 pm

There are new ” credit card” washing businesses out there that will allow credit. These established businesses better get with it now or lose business.
KC

July 9th, 2012 at 8:00 pm

It is recommended that all MMJ patients and centers operate on a cash only basis. Credit card washing sounds (and is considered) money laundering at the federal level.

Indeed, it is to the patient’s advantage to keep their bank, credit, debit cards clear of any MMJ purchases.

It would not be wise to try and ‘wash’ money. Take cash. Smile and be glad we have the right to take care of our plants and our patients.

kc | start@mmjbusinessacademy.com