Navigating the Challenges of Ancillary Cannabis Payment Processing for Businesses
The cannabis industry has seen remarkable growth over recent years, with the global legal market size projected to grow to $102.2 billion by 2030, increasing at a compound annual growth rate (CAGR) of 25.5% . While this creates exciting opportunities for businesses operating directly in cannabis, it also benefits a wide range of supporting businesses, often referred to as “ancillary cannabis-related businesses” (CRBs). These companies, providing everything from packaging to legal services, are critical to the success of the cannabis industry. However, just like cannabis-touching businesses, ancillary CRBs face significant challenges when it comes to payment processing and financial services.
The Growing Demand for Ancillary Cannabis Payment Processing
Ancillary cannabis businesses operate in a complex and uncertain legal environment. The cannabis industry, while legal in various states, remains federally illegal in the United States. This makes banks and payment processors hesitant to work with businesses that even indirectly support cannabis operations. Despite the critical role they play in supporting the industry, many of these businesses are categorized as “high-risk” and often struggle to secure reliable cannabis payment processing solutions.
From consultants to packaging suppliers, ancillary businesses need to process payments efficiently to thrive. Unfortunately, access to traditional banking services and credit card processing has remained out of reach for many. This is largely due to the anti-money laundering (AML) laws and the Bank Secrecy Act (BSA) that regulate financial institutions and prohibit any involvement in transactions tied to federally illegal activities .
Why Ancillary Cannabis Merchant Accounts Are High-Risk
Cannabis-related businesses, including non plant touching or Ancillary CRBs, are often considered high-risk by banks and payment processors due to their association with the cannabis industry. The federal government’s stance on cannabis presents a significant hurdle for financial institutions. Under the BSA and AML laws, financial institutions are required to monitor and report any suspicious activity, including transactions tied to cannabis. This means that every transaction involving cannabis-related businesses could potentially require a Suspicious Activity Report (SAR), adding a layer of complexity and cost for banks.
In addition, financial institutions are required to comply with strict AML policies and risk severe penalties if they fail to do so. The fear of prosecution or losing access to Federal Reserve services is enough to deter many banks from serving the cannabis industry or its ancillary businesses. Unfortunately, this leaves these businesses in a difficult position, unable to access the banking services they need to grow.
The SAFE Banking Act and Its Implications for Cannabis Payment Processing
The Secure and Fair Enforcement (SAFE) Banking Act, which has passed the House multiple times, aims to ease some of the financial challenges faced by cannabis businesses by protecting banks and credit unions from federal punishment when working with legal cannabis companies . However, the Act does not address many of the issues faced by ancillary cannabis businesses and doesn’t eliminate the reporting requirements or risks related to AML and BSA compliance.
Even if the SAFE Banking Act is enacted, banks and payment processors would still need to navigate strict compliance procedures, which means that obtaining reliable cannabis payment processing for ancillary businesses would remain a complex task. The legislative efforts are a step in the right direction but may not be the silver bullet the industry hopes for.
Why Cannabis Related Businesses Need Specialized Ancillary Cannabis Payment Processing
Given the stringent regulations and complexities involved, it is crucial for ancillary cannabis businesses to work with a specialized merchant services provider (MSP) experienced in high-risk industries, particularly cannabis payment processing. Securing an ancillary cannabis merchant account requires more than just proving creditworthiness—it involves navigating a complex regulatory landscape.
A knowledgeable MSP can guide businesses through the underwriting process, ensuring that they meet the necessary compliance standards from the outset. This includes making sure the company’s website is free from red flags that might trigger further scrutiny during the approval process. Additionally, an experienced provider can advise businesses on best practices to avoid delays in securing payment processing solutions.
The Importance of Choosing the Right Cannabis Payment Processor
Many companies claim to provide high-risk merchant accounts, but few truly understand the unique challenges faced by ancillary cannabis businesses. To secure a reliable and transparent cannabis merchant account, it’s essential to choose a provider with deep experience in the cannabis industry. This ensures not only that the account will be approved but also that it will operate smoothly in the long term.
At Bankcard International Group, we specialize in offering merchant accounts for high-risk industries, including ancillary cannabis-related businesses. We understand the complexities of the cannabis industry and have built strong relationships with banking partners to provide compliant, reliable payment processing solutions. Our services go beyond the basics of credit card processing—we help businesses position themselves for success by advising on compliance, website optimization, and regulatory requirements.
Examples of Ancillary Cannabis Businesses We Serve
Ancillary cannabis businesses come in many forms, from legal services to packaging suppliers. Some examples of companies we serve include:
- Cannabis industry consultants
- Packaging and labeling manufacturers
- Marketing and advertising agencies focused on the cannabis sector
- Trade show organizers for cannabis-related events
- Suppliers of cultivation tools and equipment
- Cannabis website designers and SEO professionals
These businesses, while not directly involved in the sale of cannabis, play an integral role in the industry’s success. Our cannabis payment processing solutions allow these companies to accept credit cards legally and transparently, ensuring they can grow alongside the cannabis sector.
The Path Forward for Ancillary Cannabis Merchant Accounts
The cannabis industry, and the ancillary businesses that support it, face a unique set of challenges when it comes to payment processing. While the SAFE Banking Act and other legislative efforts offer hope for more accessible financial services, the reality is that securing a cannabis merchant account remains difficult for many.
For businesses looking to support the cannabis industry, working with a specialized MSP like Bankcard International Group is essential. With our expertise in cannabis payment processing, we can help ancillary businesses navigate the complexities of compliance, ensuring that they have access to the financial services they need to thrive.
If your business is struggling to secure an ancillary cannabis merchant account, Bankcard International Group is here to help. Contact us today to learn more about our cannabis payment processing solutions and how we can support your business.
