It’s no secret that the cannabis industry is booming, with an estimated global market size of $16.7 billion in 2022. Forecasters predict a staggering growth to $102.2 billion by 2030. This growth positively impacts various ‘ancillary’ businesses, essential for supporting the industry. However, these businesses face a significant hurdle: payment processing.
Supporting Industries in the Cannabis Realm
From farming supplies to testing labs and packaging suppliers, numerous businesses are vital in supporting the burgeoning cannabis industry. Yet, the irony is, while they fuel the industry’s growth, they often struggle with payment processing – an essential component for any modern business.
The Banking Dilemma for Cannabis-Related Businesses
While the cannabis sector’s struggles with banking and payment processing are well-known, ancillary businesses also find themselves in a tough spot. Financial institutions, wary of federal laws, often hesitate to offer payment processing services to businesses even remotely associated with cannabis.
Legal Complexities and the Ripple Effect
The legal intricacies of the cannabis industry extend far beyond the plant itself. Lawyers, consultants, packaging suppliers, and various service providers all play a crucial role. Yet, their association with the cannabis industry often places them under scrutiny by financial institutions, impeding their ability to process payments effectively.
The High-Risk Label: A Stumbling Block for CRBs
Ancillary cannabis companies face the same banking regulations as plant-touching businesses. The Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) laws place a heavy burden on financial institutions serving these businesses, often labeling them as ‘high-risk.’
Navigating the Tightrope of Regulations
Banks serving ancillary cannabis businesses must navigate a minefield of legal liabilities, increased compliance costs, and rigorous reporting requirements. This situation often leads to a reluctance to serve these businesses, further complicating their operational challenges.
The SAFE Act: A Potential, Yet Incomplete Solution
The Secure and Fair Enforcement Banking Act, though promising, doesn’t entirely resolve the issues faced by ancillary cannabis businesses. It aims to protect financial institutions from federal repercussions but doesn’t alleviate the requirements for compliance with AML laws and SARs reporting.
The Road Ahead for CRBs
Ancillary cannabis businesses must seek knowledgeable Merchant Services Providers (MSPs) specializing in high-risk accounts. At Bankcard International Group, we understand these unique challenges and offer tailored solutions to ensure legal and transparent payment processing.
Expert Guidance for Compliant Payment Processing
Securing a high-risk merchant account requires more than just financial documents. It’s about presenting a well-structured business model that aligns with compliance requirements. Our team at Bankcard International Group offers expert advice and robust solutions for a wide range of ancillary cannabis services.
Conclusion: Embracing Challenges, Securing Solutions
Despite the hurdles, it’s possible for cannabis-related businesses to thrive with the right payment processing solutions. If you’re an ancillary business in the cannabis industry looking for reliable payment solutions, reach out to us. Let our team of experts guide you towards success in this dynamic and challenging industry.
